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In 2020 and 2021, Crypto investments saw a dramatic increase in popularity, which enabled many of the top Cryptos to reach all-time highs. Bitcoin (BTC), the most significant of them all, increased from roughly $7,000 in January 2020 to over $68,000 in November 2021. But in 2022, things changed abruptly.
Prices began to fall when the Federal Reserve implemented economic tightening measures, and investors turned away from riskier assets. The market then had a string of setbacks, and the prices fell even further after each one. The collapse of the Terra (LUNA) network was one such incident, which had repercussions on the market for several months afterward.
However, as we are towards the mid of 2023, some investors are hopeful that the worst may be over and have started thinking about investing in Cryptos. So we did a little digging and prepared a list of critical questions for you to consider before buying Crypto in India in May 2023. So let’s have a look at them.
Q 1. What is your ultimate investment goal?
Your investment goal matters the most, so you should consider your investment goal before buying any Crypto. Do you want to make an instant profit, or do you want to hold them for the long term? If your goal is to make a quick profit, then you may want to consider day trading or investing in high-risk, high-reward Cryptos. On the other hand, if you are interested in holding for the long term, then you may want to consider investing in established Cryptos such as Bitcoin or Ethereum.
Q 2. How much are you aware of the current market scenario?
High risk and volatility are what the Crypto market is famous for, so it is crucial to study the current market conditions before investing carefully. The Crypto market is well-known for its volatility, so it’s important to consider the current market condition before investing. Is the market bullish or bearish? Is there a lot of volatility, or is the market relatively stable? Understanding the current market condition can help you make better investment decisions.
Q 3. How much are you willing to take investment risks?
Crypto investments are considered risky, but it’s important to consider your risk tolerance before you make any Crypto investment decisions. How much are you willing to take on the high-risk investments, or how comfortable are you with low-risk, low-reward investments? This way, you can easily come to a conclusion to determine the type of Crypto you should consider investing in.
Q 4. How strong is the technology behind the Crypto?
Before you choose a Crypto for investment, you should definitely consider the technology behind it. What is the underlying technology of Crypto? Is it based on blockchain technology or some other type of technology? Answers to these questions will help you make a better investment decision for the Crypto you want to buy.
Q 5. What is the regulatory environment surrounding the Crypto you want to buy?
The regulatory environment surrounding the Crypto is also an important factor to consider before investing. Are there any regulatory hurdles that cryptocurrency may face in the future? Understanding the regulatory environment can help you make better investment decisions.
Bottomline
Nobody can exactly predict the prices of Crypto. Although, with the upcoming regulations, there may be short-term volatility, even if it helps to strengthen the Crypto market in the long run. The current Crypto winter appears to be unyielding, and prices may remain low for a considerable period.
If you plan to invest in Crypto, do not make the decision based on expectations of a similar surge like that of 2021. Instead, make the decision because you have a thorough understanding of blockchain and its potential applications in the future. However, even then, it is crucial to follow the golden rule of Crypto investing and invest only the money you can afford to lose.
Frequently Asked Questions
How Many Cryptocurrencies Are There?
There are over 5000 other digital currencies available on the internet in addition to Bitcoins. The only problem is that they haven't gotten the users' attention. Besides Bitcoins, a few other digital currencies have gained popularity among users. It's been more than ten years since Bitcoins were first released, and now they've achieved new heights thanks to their phenomenal success.
How Safe Are Cryptocurrencies?
Cryptocurrencies can be safe, but your crypto wallets can be hacked if proper security steps are not performed.There are also dangers and uncertainties associated with investments, and we cannot declare any virtual currency investment risk-free. Buying and selling cryptocurrencies does not have to be dangerous if the trader is well-versed in the market and treats his coins with care.
Is Cryptocurrency Banned In India?
No, cryptocurrency is not banned in India. India has seen its ups and downs in the crypto sector concerning its legal status. The Reserve Bank of India (RBI) issued a circular in April 2018 advising all organizations under its jurisdiction not to trade in virtual currencies or provide services to assist anyone in dealing with or settling them. A government committee proposed outlawing all private cryptocurrencies in mid-2019, with up to ten years in prison and severe penalties for anyone dealing in digital currency. The Supreme Court overruled the RBI's circular in March 2020, allowing banks to undertake cryptocurrency transactions from dealers and exchanges.
What Is Cryptocurrency?
A cryptocurrency is a digital currency secured by encryption, due to which chances of activities such as counterfeiting and double-spending taking place get close to impossible. Cryptocurrencies get created on blockchain technology ( a distributed ledger enforced by a distributed network of computers). Cryptocurrencies are unique in that they do not get issued by any central authority. The term "cryptocurrency" comes from the encryption techniques used to keep digital currencies and the network safe.
Is Pi Cryptocurrency Safe?
Pi Network (PI) is the newest digital token to catch the cryptocurrency community's interest, even before it has wholly debuted. Some users see it as a chance to get engaged in a cryptocurrency from the beginning and profit in the future, similar to how early Bitcoin adopters made huge profits by mining and keeping the coin. Other users have compared Pi to a worthless multi-level marketing (MLM) scheme.
How To Invest In Cryptocurrency Stocks?
Cryptocurrency can be purchased in two ways: through mining or exchanges. The process of confirming and adding transactions to the blockchain public ledger is known as cryptocurrency mining. Cryptocurrency exchanges are another option. Exchanges make money by charging transaction fees, but there are alternative platforms where you may communicate directly with other cryptocurrency traders.
Is Ethereum Safe To Invest?
The Bitcoin market is unquestionably more volatile than the stock market. This may not be the market for you if you are incredibly risk-averse. Ethereum, on the other hand, may be a terrific investment for you if you're a diamond-handed investor who won't lose sight of short-term losses. Ethereum is a relatively safe investment as it is also based on blockchain.
How Cryptocurrency Works?
Cryptocurrencies use cryptography technology to keep transactions and their units (tokens) secure. Cryptocurrency works via a technology called the blockchain. A blockchain is a decentralized technology that handles and records transactions across numerous computers. The security of this technology is part of its value.
Are Cryptocurrencies Legal In India?
In India, cryptocurrency is legal, and anyone can buy, sell, and trade it. Because India lacks a regulatory system to regulate its operations, it is presently uncontrolled. According to the Ministry of Corporate Affairs, companies must now document their crypto trading/investments inside the financial year.
Which Cryptocurrency Is Best To Invest In 2021?
Many altcoins are flourishing to invest in. Some cryptocurrencies with great potential are Ether, Ripple, Tron, and more. Investors are trying to diversify their portfolios and are flocking to the leading cryptocurrencies. Many growing businesses are already accepting cryptocurrency as acceptable payment methods.
Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.
