Crypto Investing
21 Feb 2022

5 Things A New Crypto Investor In India Should Know

Nisha Ramesh

New to crypto? We’ve got you. Since it is a fairly new asset, the idea of investing can be overwhelming for some.

It shouldn’t feel that way anymore, though. Because this article will give you much of what’s needed to help understand cryptos and how to invest in them.

All set to get crypto-savvy?

Key Takeaways

  • Cryptos are classified as virtual digital assets. They exist on the blockchain and are therefore not tangible.
  • They can be used as a store of value or a medium for exchange.
  • Over the long term, crypto assets have outperformed other assets, providing significantly higher returns.
  • Healthy investment strategies include: Doing Your Own Research (DYOR), investing in fundamentally strong coins, and keeping a long-term return horizon.

The 5 Things Every New Crypto Investor Must Know

Five Things A New Crypto Investor In India Should Know

1. Cryptos are fundamentally strong assets

Cryptos are a lot like any other asset. The main difference is that they exist in digital form, on a blockchain.

Cryptos also have different utilities. Some crypto assets can act as a store of value, whereas others can be used as a medium of exchange.

The value of crypto assets in the market depends on a variety of factors, such as: 

  • The utility of the token;
  • Its tokenomics;
  • Level of decentralization in the project; and
  • The technology used.

Over the last decade, fundamentally strong crypto assets have witnessed tremendous growth. For example, the value of Bitcoin has grown over 1500% over the past five years.

2. Crypto is not illegal in India

Yes, that’s right, crypto is NOT illegal in India!

Given the usual resistance that comes with anything new, India and in other countries as well, crypto is making slow advances when it comes 

to legalization. But there is no ban.

In fact, governments all around the world are collectively working toward bringing out a framework to regulate crypto and promote its underlying technology. For example

Recently, in the Annual Budget of FY 2022–23, the Union Government of India announced the following crypto-specific regulations:

  • The government has imposed a flat 30% tax on any gain made through crypto transactions, effective April 2022. 
  • Gifts given in virtual assets will be taxed at the recipient’s end, at 30%.
  • TDS of 1 % applies to any transfers made from 1 July 2022.

3. Cryptos are highly volatile

Crypto assets are highly volatile when compared to other traditional asset classes. In the past, even established coins like Bitcoin and Ethereum have shown high volatility, rising and falling by nearly 15–20% in a single day.

Therefore, it is very important to invest as per your risk tolerance. Remember, despite all your research, the coin of your choice might underperform in the short term.

That said, the long-term trend indicates that crypto returns have been great. For example, the second-largest crypto, Ethereum, has gained over 1,300% over the past 5 years. The only caveat is this: DYOR before investing in any coin. 

4. Research is the trick of the trade

If point 3 left you wondering how to pick the right crypto, look no further.

As strong as cryptos might be, investments should always be made very carefully. We encourage you to research the technical and fundamental factors of the coin before you put in any money.

Two reasons why.

Firstly, DYOR is absolutely necessary while evaluating cryptos. Of course, you also need to keep your investment style and risk appetite in mind when you do this. As a new investor, it is important for you to determine your investing comfort zone. Questions to think about include: Are you a risk-averse person or do you like to take risks on investments? How much can you afford to invest in highly risky assets? This should help establish a strategy that works for you.

Secondly, research also helps you stay confident with your investments. Holding assets for a long term can be excruciating if you’re not certain about their fundamental value. 

5. Learn how to protect your coins

Since no online system is completely invulnerable to attacks or hacks, investors need to take measures to protect their assets. That applies to assets on the blockchain as well.

Read about the various kinds of scams. Knowing what to expect will help keep you a little safer.

Also, consider choosing a crypto exchange that gives utmost importance to the safety and security of users’ funds. CoinSwitch, for instance, has a highly secure online wallet.

Bonus: Tips at a glance for new investors

Here are some of the actionable crypto investment strategies summed up for you:

  • Aim for a lower buy average: Cryptos might be unpredictable and wild in the short term, but they’re easier to understand in the long run. Our Systematic Investment Plan (SIP) can give you the advantage of some protection against higher volatility. It is a great tool to build wealth with small investments, so long as you can wait for a while.
  • Choose coins well: There’s a lot of research that goes into choosing the right crypto. Not rocket science, though. Help is at hand.
  • Analyze technical trends and charts: New investors can get an edge over other players in the market by learning about charts and other technical indicators. For everything, you need to know, click here and enjoy the read.
  • Invest in fundamentally sound currencies: Most new investors would do well to start their investments with sound crypto assets like Bitcoin and Ethereum. However, this isn’t investment advice. Make sure that you are doing all the research you need, ensuring due diligence, and analyzing your risk appetite before investing.

For more tips on how to invest in crypto, click here.

Wrap-Up

For a great investment and trading experience as you start your crypto investment journey, head over to CoinSwitch. We enable quick fund transfers and offer more than 100 different crypto tokens for you to choose!

Disclaimer : Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The information provided in this post is not to be considered as investment/financial advice from CoinSwitch. Any action taken upon the information shall be at user's own risk.

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Nisha Ramesh

Content Writer

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