The cryptocurrency market has taken the world by storm, with coins like Bitcoin, Ether, Dogecoin, Shiba Inu and others witnessing massive popularity among investors in the last few years. Cryptocurrency has, in all fairness, set a new era for how business transactions take place globally — with popular figured like Elon Musk endorsing them. However, cryptocurrencies are volatile in nature and subject to market risk. For example, world’s largest cryptocurrency Bitcoin made record when it touched $69,000 last year, only to fall below the $40,000 mark within three months. Cryptocurrencies are therefore labelled as risky assets, and investors must know that there are volatilities associated with investing in them.
Having said that, those who are willing to invest in Bitcoin or cryptocurrencies in general can keep in mind some basic points while engaging in its trade. According to Kumar Gaurav, founder and CEO at Cashaa, a crypto managing platform, one of the most important things to understand is how much you invest in crypto. ” You must understand that cryptocurrency is extremely volatile. The market is open always and the prices fluctuate depending on global demand and supply factors. Cryptocurrency as an asset is slightly riskier than other investment assets,” he says.
Speaking on similar notes, Darshan Bathija, co-founder and CEO of Vauld, and a memebr of Blockchain and Crypto Assets Council (BACC), offered a solution to make Bitcoin a bit risk-free. He said, “Crypto is rife with volatility and speculation. If you want to invest in Bitcoin, don’t chase the small gains, or get disheartened by small losses. Bitcoin is a great long-term asset if you want it to be, more importantly, if you can cope with occasional short-term dips. If you don’t want to deal with the volatility, the solution is to put your Bitcoin in a fixed deposit.”
Gaurav, meanwhile, highlighted the importance of choosing the right cryptocurrency project to invest in. “There are more than 11,000 crypto projects that are listed now on CoinMarketCap. Out of the 11,000 tokens, only few of them are worth investing in. It is important for every investor to understand the project, do research about the team and then consider investing in the project. Know the coin, the platform it trades on and the underlying technology,” he said.
Ketan Surana, co-founder and CEO of Coinsbit India, also a member of BACC, said in this regard that if someone is interested in Bitcoin, he or she should know the basics. “One must make sure to learn the basics of Bitcoin as in — how it is mined; reasons; why people believe so much in this asset class. They are limited to 21 million, and the last Bitcoin will come in the year 2140, its tokenmonics and the halving event associated with it.”
Echoing sentiments, Bathija said, “Always learn before putting money in. With crypto, the learning curve is steep but it’s of utmost importance. Learn about transactions, custody, networks, and wallets. These are the building blocks for Bitcoin investing. That’s why we’re working on a learn product integrated into our App to educate users before they buy a cryptocurrency.”
Those being said, Gaurav added that one must not fall for the hype that is often associated with a certain cryptocurrency. “Often it happens that a coin rises quickly and then loses the gains suddenly. You must learn how to have patience and not fall for the hype. Check whether the asset is on an upswing on its own or riding a bubble. There are situations when an influential person can move the market,” he said.
“If there’s anything certain about the cryptocurrency industry, it is volatility. Factor this while making investments. It is not a given that your investment will always grow, there will be times when the asset will see a dip. Keep that possibility in mind when entering the industry,” he further said.
The experts also stressed on the importance of finding a safe crypto wallet, since the asset is prone to frauds. “Always make sure that you purchase Bitcoins from a reputed crypto-asset exchange company so that your funds whether Fiat or Cryptoassets are always secured and can be deposited; withdrawn or converted into any other asset seamlessly,” said Ketan Surana.
“Some of the best options are wallets which are also linked to exchanges, allowing you to store and trade your cryptocurrency assets from the same place,” added Gaurav.
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