4 Things to Consider Before Investing in Cryptocurrencies

By July 9, 2020March 28th, 20224 minute read
Things to Consider Before Investing in Cryptocurrencies

People generally equate bitcoin (BTC) with the entire cryptocurrency space. But that’s not true. A variety of crypto-assets now make up the digital currency space. The exact number – 5000+

With this rapid increase in the number of different cryptocurrencies, investment interest in these virtual assets has also spiked. You too must be eager to ride the cryptocurrency wave and become a part of this budding culture.

Great! The cryptocurrency market is an amazing place for long-term/short-term wealth creation. You can turn decent profits on your investment if you take into consideration the below points, and follow a calm and calculated approach.

Study and Research About the Cryptocurrency of Your Choice

Blatantly going about investing without knowing the cryptocurrency’s background can put your capital at risk. It is necessary to do some digging first.

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Take some time to visit the official website, pull out the white paper, and go through it, read all the latest news around the cryptocurrency in which you prefer to invest. Ideally, you should follow the below steps:

  • Read the white paper
  • Check out the Github repository for source codes
  • Visit Twitter and scour for investment sentiment about the particular cryptocurrency
  • Go on Reddit, Bitcointalk, Telegram and similar other platforms, interact with community members, observe the discussions
  • Search for reviews on Google, YouTube, Trustpilot, Steemit, etc.
  • Evaluate the team – check out their LinkedIn profiles, look for previous work experience, involvement level in cryptocurrencies and blockchain
  • Ask around, talk to your friends about the crypto asset you are looking to put your money in

Invest as much time as necessary for studying and researching about the cryptocurrency project. This will boost your confidence, which in turn will result in investment decisions taken rationally and not emotionally. Watch this video to know more about studying and researching crypto projects:

How to research a cryptocurrency project

Also, it is necessary to understand the difference between the usually available investment options like mutual funds, stock markets, bonds, and cryptocurrency markets.

What is it about the digital asset space that’s driving a dramatic surge in investment interest? Why are investors willing to give crypto investment a shot, after participating in traditional markets?

You must try finding answers to these questions.

Go Through Market Statistics

After studying and researching about the technical facets of the crypto projects of your preference, consider analyzing its market.

Go on websites like CoinMarketCap, find out the latest figures showing the size of the crypto asset’s market (also known as market capitalization). Also, check the token’s price performance on two levels. First, evaluate how the crypto asset has performed from the beginning of the year to date.

Next, see how the cryptocurrency has been performing from the very beginning until the present time. Past performance is not a guarantee for future returns. But, it can serve as a general yardstick for making investment decisions.

Look for price graphs that follow an uptrend pattern and are not choppy.

Learn Technical Analysis

Stock market traders heavily use technical and fundamental analysis to place their trading/investment bets. The tools are highly reliable and can be used extensively to make prudent investment decisions.

In your study and research, you will come across a variety of crypto technical analysis (also called TA) articles on the internet. These articles quantify trades and help investors make informed decisions. Consider learning TA to benefit from your crypto-asset investments.

In India, the National Stock Exchange provides several live courses for beginner traders and investors. The material may be designed for traditional financial markets but can be used for cryptocurrency trading and investment as well. You can check them out here: https://www1.nseindia.com/education/content/online_courses.htm

Cryptocurrency Investing: Testing and Tracking

To get a feel of investing in the digital asset market, you have to buy some cryptocurrency first. You can start with a minimal amount. An amount of money that you won’t regret losing, in case you can’t recover it.

At WazirX, we offer a plethora of crypto options for you to explore according to your portfolio budget. You can buy the cryptocurrency of your choice with INR or Tether (USDT). Check out the video below to know how to do so:

Buy Cryptocurrency with WazirX P2P

Once you buy your preferred cryptocurrency, start tracking its market activity and performance over the next few days. You may be required to do so for a considerable period before increasing your exposure. See the below video to know how you can track your crypto portfolio on WazirX:

Use WazirX to track your cryptocurrency portfolio

If you don’t want to get your hands dirty, that’s perfectly fine. You can plan your cryptocurrency investment by setting aside a certain amount. You also can follow crypto traders on Twitter or in WazirX Telegram communities and understand their process. Figuring out their investment methods might give you a deeper insight into their strategies. We hope this helps. Happy investing!

Further Reading:

6 Things to Consider Before Investing in Bitcoin

8 Benefits Of Investing In Ripple (XRP)

Why Start-ups Should Consider Using Bitcoins

5 Things to Keep in Mind While Buying or Selling Ethereum

Also you can download the app and Start Trading Now!

Android App – WazirX – Buy Sell Bitcoin & Cryptocurrency Exchange

iOS App – ‎WazirX

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 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.

What Is Virtual Currency?

Virtual currency is a type of uncontrolled digital currency that can only be used online. It is exclusively stored and transacted using designated software, mobile or computer applications, or unique digital wallets, and all transactions are conducted through secure, dedicated networks. Because digital currency is just currency issued by a bank in digital form, virtual currency is not the same as a digital currency. Virtual currency, unlike ordinary money, is based on a trust structure and cannot be issued by a central bank or other banking regulatory organization.

What Is Crypto?

Crypto or a cryptocurrency is a digital currency protected by cryptography, making counterfeiting and double-spending nearly impossible. Blockchain technology is used to produce cryptocurrencies (a distributed ledger enforced by a distributed network of computers). Cryptocurrencies are distinct in that a government does not issue them. The word "cryptocurrency" refers to the encryption methods employed to keep digital currencies and the network secure.

How To Invest In Cryptocurrency?

There are two ways of investing in cryptocurrency, mining and via exchanges. Cryptocurrency mining is considered the procedure of verifying and adding transactions to the blockchain public ledger. Another option is via cryptocurrency exchanges. Exchanges generate money by collecting transaction fees, but there are alternative websites where you can interact directly with other users who want to trade cryptocurrencies.

Is Cryptocurrency Legal In India?

In India, cryptocurrencies are legal; anyone can purchase, sell, and trade cryptocurrencies. They are currently unregulated; India does not have a regulatory framework in place to regulate its functioning. According to the Ministry of Corporate Affairs (MCA), companies must now declare their crypto trading/investments during the financial year, according to the Ministry of Corporate Affairs (MCA). Cryptocurrency transactions have been taxable in India when people receiving such gains are Indian tax residents or where the crypto is considered to be domiciled in India

Is Bitcoin A Good Investment For The Future?

Some investors are afraid of the risks or devastation, but others are very eager to pursue the possibility of profit from a Bitcoin investment. A Bitcoin investment is similar to stock investing, except it can be more volatile.

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.

Is Bitcoin Cash A Good Investment?

Bitcoin Cash is a hard fork of Bitcoin formed in 2017 to address Bitcoin's scalability and challenges. Bitcoin Cash seeks to make global transactions faster, cheaper, and more secure. Bitcoin Cash is now accepted by thousands of online and offline businesses all over the world. Studied correctly, Bitcoin Cash may be an investment worthy of consideration.

What Is The Safest Cryptocurrency To Invest In?

Bitcoin has had the highest market capitalization, has been around the longest, has the most experienced development team, and has enormous network impact and brand recognition. As a result, while trading cryptocurrencies, the rate of return on Bitcoin is commonly used as a benchmark. However, the risks associated with cryptocurrencies remain, and the safest cryptocurrency for you depends on your analysis.

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.
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