Don’t take very big bets
The incredible returns that some cryptos have provided in the last year are enticing. Six months after investing Rs 10,000 in Dogecoin, it is currently worth Rs 5.75 lakh. However, don't get carried away by these figures.
Be ready for extreme volatility
The greatest way to learn about cryptocurrencies is to invest in them. However, it's a high-risk, high-reward game, and you'll need to be able to handle a lot of volatility. An overnight drop of 70-80% is also possible, as the May crash demonstrated. Remember that even a bluechip like bitcoin has dropped 48% from its April peak of Rs 50 lakh.
Use trustworthy platform
In India, the crypto industry is unregulated, and new companies pop up on a daily basis. Though the Supreme Court overturned the RBI's crypto ban, and the government has indicated that it will take a measured approach to regulating the market, investors must exercise caution when selecting an intermediary.Invest through an established and trustworthy platform so that your money does not get stuck if there is a regulatory setback or the promoter company goes under.
Don’t act on tips without verifying
There is a severe paucity of reliable information in the cryptosphere. Investors rely heavily on social media for unconfirmed information. Self-described crypto analysts form Whatsapp groups with their friends and associates who vouch for their correctness.These analysts trap gullible investors, first by charging a fee for the tips and then using them for their pump-and-dump operations. As a rule, you should verify the information before you invest. “Check the market cap and trading volumes of the coin. A low market cap and insignificant daily volumes are obvious red flags.",
Focus on bluechips
The crypto market, like the stock market, has bluechips, mid-caps, and penny coins. Don't be enticed to buy obscure coins just because you can get a large number of them for a low price. Larger coins are more expensive, but they are more stable. In any case, you can buy in small amounts, so don't be concerned about the cost. Bitcoin is the crypto space's bluechip and is responsible for the entire market sentiment.
Keep abreast with global developments
Despite the fact that you may be buying and selling in India, the crypto market is global. Any global development can have an impact on prices, so it's important to keep up with what's going on in key markets like the United States, Singapore, and Europe. “One of the reasons for the drop in crypto prices in May was the US crypto tax,”.
