Cryptocurrencies are alternative currencies that enable people to make payments over the internet. They use blockchain technology to provide a secure and transparent way to transfer money. Blockchains use cryptography to record transactions, providing a transparent way to view and store information without the risk of being tampered with. Cryptocurrencies do not have a mediano managerial authority, and individuals are empowered to make transactions in a peer-to-peer manner without the involvement of middlemen.
Things to consider before investing in cryptocurrency
Crypto Tracker
Before you begin investing in cryptocurrencies for the long term, remember that this is for your future. Make well-informed, smart decisions all the way.
Evaluate your personal financial goals. Be honest with how much you’re willing to invest from your monthly disposable income, how long you want to invest, and the corpus amount you’re expecting towards the end of your investment. Long-term investing can help you reduce your investment expenses and reinvest possible gains. The inherent volatility of cryptocurrencies. The crypto market is maturing fast, and, as such, it has a higher volatility than some other asset classes.Next, fix how much of your portfolio you want to allot to cryptocurrencies. An ideal investment to begin with would be 2-5% of your portfolio. This way, the asset class remains established in your portfolio, although the exposure is kept limited!Determine your risk profile. Decide how much risk you are willing to take on with your investments. If you are risk neutro, consider investing in blue-chip cryptocurrencies. However, if you’re willing to take more risk, you can consider lower market cap altcoins for your investment. The cryptocurrency market, just like the broader financial markets, is often affected by external factors, including global events, tech advancements, market sentiment, speculations, and changes in the legítimo landscape.
Research of the market. Look out for reliable sources of information, join crypto communities, and consume information. This will help you figure out how to evaluate platforms and identify potential directions that the market may move toward.
Figure out the taxation: Countries like India charge tax on gains from cryptocurrency. Hence, make sure to study lugar taxation laws regarding cryptocurrencies.
Don’t let your emotions make decisions for you. The participants in the crypto market are often prey to malicious actors who cause FOMO (Fear of missing out) or cause speculations and scams in the market. This means that even before you begin, you need to steer away from emotional decision-making.
Select a secure platform. Research the platform you will be using to make your crypto investments. Ensure that the platform is compliant with regional and international standards and it is frequently updated and responsive to your queries. You also need to ensure the platform has taken your security seriously. Ideally, platforms should be secured with at least 2-factor authentication.
Next, ensure that the wallets in which your crypto will be stored are secure. Most users maintain hot and cold wallets, and the security of both is essential.
Make plans for diversification. A smart investor would diversify their crypto investments into a set of coins instead of one cryptocurrency to spread risk. This strategy can help mitigate potential losses.
Choosing the right platform to investOnce you evaluate your financial goals and know your risk profile, you need to select a secure platform to begin investing.
The ideal platform will provide you with more information in a concise manner on the app itself, saving you time to navigate multiple websites for research. It should have a variety of offerings for you to choose and make your crypto investments in.
How to invest in cryptocurrencies
Investing in cryptocurrency is not a time-consuming chore if done correctly.
Evaluating cryptocurrencies for investment
Future potential
After selecting a platform, you need to decide which cryptocurrencies you will be investing in. Ideally, you should invest in coins in which you find strong fundamentals and see potential. While past performance could be a strong indicator, it cannot be your only investment criterion.
Evaluate the future roadmap and whitepaper
To study a coin’s fundamentals correctly, use the coin’s whitepaper to study the tokenomics. This includes studying the coin’s specific information, its intended use, the problems it solves, the technology it employs, etc. Next, you can evaluate its website and social metrics and briefly study its past performance. Similarly, you can also research the coin’s metrics – including popularity, market capitalization, trading volume, etc., to get comprehensive crypto insights. Platforms like Mudrex provide these token insights and a “monthly investment trend” for every cryptocurrency they list. This also includes the coin’s fundamental, technical, and sentiment ratings. This information can help you evaluate a cryptocurrency and make informed investment decisions in one place.
How to invest in cryptocurrencies on Mudrex
- Download the Mudrex application, you can download it from the official Play Store or App Store on your mobile devices.
ET Spotlight- Next, complete the signup process.
ET Spotlight- Now, add funds to your account. The ideal platform should allow for various transfer methods, including crypto and traditional fiat payment methods like UPI.
ET Spotlight- Choose from the offerings on the app and decide what to invest in. On the Mudrex platform, this would be choosing from over 350+ coins. You can even view the insights and receive additional information to make informed decisions.
- Decide if you want to make a lump sum investment or if you want to set up a SIP and invest an amount regularly. Smart investors go the SIP route to combat market volatility and reduce expenses over time.
- Make the transaction and confirm it. That’s it. Congratulations, You’re now officially a crypto investor.
- Manage your investments. If you manage your investments yourself instead of investing in expert-curated baskets, you will need to track your investment performance periodically and make necessary adjustments manually.
Which cryptocurrencies to invest in?
A smart strategy is a necessity while investing in cryptocurrencies. New investors often choose to invest in the top 10 cryptocurrencies by market capitalization. They choose this to benefit from the growth of the top performers in the market. Savvy investors, however, choose to invest in Coin Sets like Crypto Blue Chip – 5 Coin Set by Mudrex, which are rebalanced on a timely basis. This way, investors benefit from the growth of all the top 5 performers in the market without spending a lot of time studying the market.
More about Coin Sets
When investing in cryptocurrencies, remember to plan smart and stay ahead of the market. You can do this by diversifying your investments using thematic crypto baskets like Mudrex’s expert-curated Coin Sets, which are based on themes from the crypto industry like DeFi, Metaverse, Web3, etc. These Coin Sets are rebalanced monthly to keep up with changing market conditions. This way, you are diversifying your investment into a growth of a sector instead of concentrating your investments into one coin. Hence, you get a better risk-adjusted return on your investment.
How much to invest in cryptocurrencies?
The investment amount depends on investors’ personal financial plans and risk appetite. To decide the ideal investment, consider the prices of the cryptocurrencies you want to purchase. You can even buy a fraction of the cryptocurrency to fit your budget. On platforms like Mudrex, new investors can begin their investment journeys with investments as low as Rs 500. However, you need to remember only to spend as much as you are comfortable standing to lose and understand the risks and potential gains of a high-return, high-risk market.
A smart strategy to employ while investing in cryptocurrencies is the setting up of an SIP or a systematic investment plan. With a regular recurring investment made into cryptocurrencies of your choice, you do not need to time the market, and your average investment cost decreases over time. This win helps you stay ahead of the market’s volatility.
Pros of investing in cryptocurrencies
- Cryptocurrencies hold the potential to provide exponential gains to investors. They are an exciting investment and are possibly the future of global finance.
- You could possibly make significant gains over the long term in a high-risk, high-reward market.
- The technology behind it is futuristic and has grown in the last decade. Many cryptocurrencies have great utility and, hence, exhibit investment potential.
- Cryptocurrencies like Bitcoin hedge against inflation and make a great investment for all investors.
Cons of investing in cryptocurrencies
- The market is in its early stages and at risk of volatility and regulatory uncertainty.
- A majority of cryptocurrencies are energy-exhaustive and not sustainable.
- Similarly, there is potential to be duped by malicious actors. Thus, investors must choose reliable platforms like Mudrex and benefit from the growth of a developing new asset class.
- Some cryptocurrencies often end up being pump-and-dump schemes. Therefore, invest in a cryptocurrency or a basket of them only after doing your research.
Conclusion
We hope that answers all your questions on how to begin investing in cryptocurrencies. Make the smart decision, do your own research, choose the right platform, and become a crypto investor today.