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Are you interested in investing in cryptos but have little information about what they are or how exactly they work? Stop, take a pause! Cryptos are definitely an exciting investment opportunity and can give you good gains if you DYOR properly. However, if you’re a beginner or a new investor, the risk of losing your capital increases. You will also be prone to being lured by scammers, who can dupe you into giving away your money just like that.
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 $69,000 in November 2021. But in 2022 and 2023, things changed abruptly; the crypto space went through a rough “crypto winter.”
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. The collapse of the Terra (LUNA) network was one such incident that had repercussions on the market for several months afterward.
However, as 2024 began on a good note, the most anticipated Bitcoin halving event took place, shooting Bitcoin to its all-time high of $73,000 in March 2024. Various new projects were launched, and institutional adoption grew; investors and traders were full of excitement and hopeful that the worst was over and crypto investment would be profitable again.
But, for new investors and beginners, we did some digging and prepared a list of critical questions for you to consider before buying crypto in India in May 2024. Let’s quickly 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.
Related read: Understanding Cryptocurrency Trading Strategies: Scalping, Swing Trading, and HODLing
Q 2. How much are you aware of the current market scenario?
The crypto market is famous for its high risk and volatility, so it is crucial to study the current market conditions before investing carefully. 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.
Related read: Understanding the Differences Between a Bull and Bear Market
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 about the type of crypto you should consider investing in.
Related read: 6 Ways to Minimize Risks When Investing in Crypto
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.
Related read: Unlocking the Synergy: Exploring the Intersection of Blockchain Technology and Web3
Q 5. What is the regulatory environment surrounding the crypto you want to buy?
The regulatory environment surrounding crypto is also an important factor to consider before investing. Are there any regulatory hurdles that crypto may face in the future? Understanding the regulatory environment can help you make better investment decisions.
Related read: The Crypto-Regulatory Landscape: A 2023 Overview
Bottomline
Nobody can exactly predict crypto prices. However, with the upcoming regulations, there may be short-term volatility, even if it helps to strengthen the crypto market in the long run. The crypto winter is over, and the current market has recovered.
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 crypto investment decisions after having 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.
Happy Trading!
Frequently Asked Questions
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.
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.
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 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.
Can I Invest In Cryptocurrency?
Yes, with exchanges like WazirX, you may invest in cryptocurrency in India. To begin, go to the WazirX website and register. After that, you will receive a verification email. The link received by verification mail will only be available for a few seconds, so make sure you click it as quickly as possible. This will successfully verify your email address. The following step is to set up security, so choose the best solution for you. After you've set up the security, you'll be given the option of continuing with or without completing the KYC process.
Is Bitcoin And Cryptocurrency The Same Thing?
Bitcoin is a cryptocurrency that was designed to facilitate cross-border transactions, eliminate government control over transactions, and streamline the entire process without third-party intermediaries. The absence of intermediaries has resulted in a significant reduction in transaction costs. Satoshi Nakamoto, the creator of Bitcoin, created the first cryptocurrency in 2008. It began as open-source software for money transfers. Since then, plenty of cryptocurrencies have emerged, with some focusing on specific fields.
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.
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.
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.
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.
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.
