Crypto Beginner

Cryptocurrencies: How to invest in India

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Key Takeaways

  • Investing in crypto assets is not simple and requires some hand-holding.
  • Trading volumes, reduced volatility, and market capitalization are some of the factors that will help you in selecting the right crypto.
  • Revenue model of the crypto, algorithm, and social engagement are other selection criteria to be considered.

Cryptocurrencies have captured the imagination of investors in the last few years. Investing in cryptocurrency might look easy until the time you have to choose from some 19,000+ cryptocurrencies currently in circulation. But help is at hand if you’re searching for the best cryptocurrencies in India. The following strategies should come in handy for you to zero in on the crypto of your choice.

How to find the top cryptocurrencies to invest in India?

Crypto-curious investors enter the investment game with the hope of making it big. For such investors, tried-and-tested cryptocurrencies such as Bitcoin and Ether are a good starting point. However, most eventually realize that investing in the top cryptos is far from simple and requires some hand-holding.

Some important factors to keep in mind:

  • Trading volume

In crypto markets, ‘trading volume’ refers to the number of cryptos traded in the market. A cryptocurrency with low trading volumes suggests that it’s tougher to buy or sell. In contrast, a crypto with a high trading volume is likely to enjoy higher liquidity. When choosing to invest, pay attention to trading volume and avoid those without significant movement in volume. Bear in mind that when the trading volume is low, the lagging trend might suggest that the coin lacks real-world use or it might have been abandoned.

A disclaimer, however, is that in cryptocurrency, trading volume can be manipulated since there’s no regulator such as the Nasdaq to record all trades. The lack of regulation encourages people or groups to spoof the market – fake buy/sell orders to raise visibility.

  • Least volatile 

Volatility–sudden upswings and downswings in price–is a factor that drives trends in the market. Most financial sectors experience volatility, but the crypto world is known to be highly volatile. Experienced traders watch volatility closely since it gives hints about potential risks or losses associated with the volatile asset.

When choosing crypto, it’s important to choose those with lower volatility since they indicate that the market is rising. A cryptocurrency with low volatility is safer to invest in since the value won’t change dramatically, even in the long term.

  • Market capitalization

Market capitalization or market cap is the market value of a cryptocurrency, calculated by multiplying the crypto’s price with the number of coins currently in circulation.

Choose a cryptocurrency with a high market cap since those with low market caps are usually high risk and likely to be new to the market. But, here’s a word of caution. Only the top cryptos are accurately evaluated using market caps since they are more price stable. As the prices of various cryptos change dramatically within a short time, new cryptos might illusively seem more valuable than they really are.

Top 10 cryptos by market cap and trading volume

The tables below will give you some direction in your search for the best investment opportunity.

Top 10 cryptos by market capitalization

(Data for both tables as of July 14, 2022)

 

Crypto

Symbol

Market Cap

1

BITCOIN

BTC

381.11B

2

ETHEREUM

ETH

133.54B

3

TETHER

USDT

65.89B

4

USD COIN

USDC

55.35B

5

BINANCE COIN

BNB

37.60B

6

BINANCE USD

BUSD

17.57B

7

RIPPLE

XRP

15.50B

8

CARDANO

ADA

14.47B

9

SOLANA

SOL

11.87B

10

DOGECOIN

DOGE

8.03B

Top 10 cryptos by trading volume

 

Crypto

Symbol

Trading volume

1

TETHER

USDT

55.15B

2

BITCOIN

BTC

35.53B

3

ETHEREUM

ETH

18.35B

4

BINANCE USD

BUSD

6.40B

5

USD COIN

USDC

5.72B

6

BINANCE COIN

BNB

1.49B

7

SOLANA

SOL

1.40B

8

RIPPLE

XRP

1.26B

9

POLYGON

MATIC

1.24B

10

BITCOIN CASH

BCH

1.22B

Other relevant criteria for selecting cryptos for investment

Crypto’s revenue model

When selecting good cryptos, it’s important to consider their revenue model or economic impact. As financial assets, cryptos have plans on how they hope to generate revenue for those in their ecosystem. The best cryptos serve a serious purpose that separates them from others

Examples include investments in Bitcoin, which is a great way of facilitating peer-to-peer transactions and Ethereum, which supports decentralized finance. Bad cryptos have no unique purpose or service they aim to provide. They are usually formed around a hype that dries up over time.

Organization behind the crypto

Cryptocurrencies are largely understood to be decentralized, but the reality is that the organizations behind them have some level of influence. For any desirable crypto, the organizational parties, including the founders, marketers, or developers, need to be reputable and credible.

If a cryptocurrency doesn’t have any visible organizational actors–on social media or the internet–they are questionable. Also, if crypto is affiliated with people of questionable reputations, it might be a sign that it is created for illegal purposes.

History of the crypto 

When choosing cryptos, it’s also important to trace its performance over time. An ideal cryptocurrency is one with steady growth in terms of users and trading volume and one that is listed on popular exchanges. However, there are exceptions to this criteria since some top cryptos today have poor histories.

For example, Ethereum’s history is tainted by a hack where key validator nodes were compromised by exploiters. But, despite the questionable past, Ethereum has risen to become one of the most profitable cryptos today.

Crypto’s algorithm

Cryptocurrencies rely on algorithms to authenticate and encrypt crypto transactions. Checking the quality of a crypto’s algorithm can be a good indicator of the legitimacy of its design, security levels, and environmental impacts.

Cryptocurrencies such as Bitcoin that utilize the proof-of-work (PoW) algorithm are secure because they require high computing power to process transactions. More recently, there’s been concerns about the environmental impact of the PoW, with most major cryptos shifting to the less energy-intensive-–proof-of-stake (PoS) algorithm.

Social engagement

The best cryptos in the market have strong communities that live on social platforms. From Bitcoin to Ethereum, you’ll find that these cryptocurrencies engage people who want to learn more and focus on developing relationships with them. A cryptocurrency that doesn’t have a social media account raises many red flags.

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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