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4 Things to Consider Before Investing in Cryptocurrencies

By July 9, 2020May 9th, 20234 minute read

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.

Get WazirX News First

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:

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

Frequently Asked Questions

Is Cryptocurrency Safe To Invest In?

Cryptocurrency investments are subject to market risks, but if sufficient security measures are not taken, trading accounts can be maliciously accessed. Investments come with risks and uncertainties, and we cannot claim that any digital currency investment is risk-free. Buying and selling cryptocurrencies can be risky even if the trader is knowledgeable about the market and treats their coins carefully.

What Is The Meaning Of Crypto?

A cryptocurrency is a digital currency that is secured by the process of cryptography, making counterfeiting and double-spending almost impossible to happen. Blockchain technology is used to produce cryptocurrencies ( a distributed ledger enforced by a distributed network of computers). Cryptocurrencies are distinct in that a centralized authority does not issue them.

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.

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.

How To Invest In Cryptocurrency In India?

There are two ways of investing in cryptocurrency, mining and via exchanges. Cryptocurrency mining is the process of verifying and adding transactions between users to the blockchain public ledger. Purchasing cryptocurrency in India is a straightforward procedure where investors simply participate by registering with a crypto exchange such as WazirX. After registering for an account, citizens can trade multiple cryptocurrencies, store cryptocurrency in wallets, and more.

What Are The Best Cryptocurrencies To Invest In?

The best cryptocurrencies to invest in would be the ones you study and analyze in detail. Some of the most popular cryptocurrencies include Bitcoin, Ethereum, and many altcoins such as Tron, Ripple, Litecoin, etc.

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

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.

Are Cryptocurrencies A Good Investment?

Cryptocurrency has the potential to make you extremely wealthy, and the potential to cause you to lose your money. Crypto assets, like any other investment, come with many risks and potential rewards. Fundamentally, cryptocurrency is an excellent investment, particularly if you want to gain direct exposure to the demand for digital currency.

Is Mining Cryptocurrency Legal?

Cryptocurrency mining can be time-consuming, expensive, and sporadically profitable. Mining has an appeal for many cryptocurrency enthusiasts as miners are paid directly with crypto tokens for their efforts. The legality of cryptocurrency mining is dependent on where you live. In India, there is no restriction on crypto mining.

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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