In recent years, the Indian finance sector has been abuzz with the term cryptocurrency. For many who rode the wave early, crypto assets turned out to be a profitable investment, but several others also ended up losing fortunes—indicating extreme volatility. Yet, cryptos have lived up to their potential of becoming a hedge against inflation. The advent of blockchain technology has also drawn in the youth in droves. Amid all the excitement, it would be worthwhile to discuss the question: How to invest in cryptocurrency in India?
DYOR & then Invest in Cryptocurrency in India
Do Your Own Research (DYOR) is a term popular among crypto-enthusiasts and is considered a valuable, no-nonsense piece of advice. With rampant misinformation all around, research could be the game-changer to ensure you invest right. Most crypto newbies in India invest in cryptocurrencies as per the advice of elders and early users. But that is not the right approach. Before buying crypto in India, you need to be familiar with the details, examine the projected growth potential of the currency you wish to invest in, and see whether it resonates with your end goals.
Social media platforms and YouTube enable the malpractice of ‘Shilling’, where influencers promote certain cryptos they have invested in and hope to move the coin prices positively. This makes it difficult for investors to distinguish between genuine investment advice and Shilling. Similarly, ‘Sybil attacks’ are quite common on social platforms. In Sybil attacks, people create multiple fake accounts and promote certain cryptos in an attempt to trick newbies into buying them.
It is therefore critical to do research before investing in cryptocurrencies to avoid falling prey to malicious advice or social media posts spreading misinformation.
How Can I Invest in Cryptocurrency in India?
To invest in cryptocurrency, one needs to register with a crypto exchange. A cryptocurrency exchange is a digital marketplace for trading in cryptos. Below are some of the most trusted exchanges in India that you can use to invest in cryptocurrency in India 2022.
Top crypto exchanges in India
CoinSwitch: CoinSwitch is the leading crypto exchange in India. It is a mobile-only crypto exchange. CoinSwitch provides you the platform to buy and sell more than 80 coins such as BTC, ETH, MATIC, ADA, and LITE. It is one of the safest exchanges in the country. Through the CoinSwitch app, one can start crypto investments with as little as ₹100. The platform supports multiple modes of payments, including UPI, bank transfer, net banking, as well as debit and credit cards. CoinSwitch has the most user-friendly interface that even beginners can get accustomed to in a matter of minutes. Both iOS and Android versions of the app are available—triggering a virtual crypto revolution in the Indian financial ecosystem.
WazirX: WazirX caters to the needs of the local and global crypto population via its Android, iOS, web, and windows applications. Some of the key features of WazirX include its support for 450 tradable cryptos and its native utility token called WRX. Users on the platform also benefit from its free P2P options for deposits and a low minimum investment of ₹100.
CoinDCX: CoinDCX has secured its place as one of the leading crypto exchanges in India. Major crypto products and services on the platform include futures, margin lending, and lending options. The platform supports 340+ cryptocurrencies and the minimum deposit is an affordable ₹100. CoinDCX uses cold wallets.
Crypto trading and risk appetite
Cryptocurrencies are, by nature, volatile investments. There are stablecoins, but the number of investors buying them is minuscule. For instance, coins such as DOGE have shot up to about ₹30 from 20 paise within a matter of 15 hours, but then it plummeted, triggering huge losses. Many new investors feel that buying into a ‘falling knife’ or a ‘dead cat bounce’ is the way to go, but they may end up losing huge sums. So, the best way to invest in crypto and make profits is to hold on to the asset patiently, invest in coins you understand, and spend only the amount that you can afford to lose.
Crypto trading vs. crypto investing
Crypto trading and investing both aim to grow the value of your investments, but follow different strategies. Crypto investors usually look at long-term profitability and take time to close on a position and usually end up making tidy profits. On the other hand, traders take minutes to just a few days to close their positions based on the market trends and try to make quick profits.
Though trading can, of course, result in quick profits due to high volatility in the crypto market, for the same reason, it can be a risky move.
- Investors usually rely on fundamental analysis to choose their coins—this approach is based on detecting the intrinsic value of a project rather than its current market valuation. On the other hand, traders use technical analysis to figure out which coin could perform well in the market over a few days using historical data and price indicators. They make their purchases based on that.
- Crypto investors have low trade frequency, while crypto traders have much higher trade frequency. This is due to the fact that investors tend to hold on to their positions for a much longer time than the average trader.
- Investors typically are the more risk-averse of the two. As they take a long time to close positions, the highs and lows for the short term get evened out, but the valuation increases. On the other hand, traders are much more risk-prone as their profits stem from market volatility.
Which Cryptocurrency is the best for investment in India?
That completely depends on the factors listed above, your investment strategy and most of all, your own research. According to the current market cap, Bitcoin remains at the top spot with Ethereum, Tether, USDC and Binance Coin following it. Most of all, we release the list of most traded coins on CoinSwitch every week.
Crypto presents an exciting, yet risky investment option. So, while dabbling in crypto, take care not to be too hasty in trying to make a quick buck. To sum up, crypto appears set to boom in India, notwithstanding concerns.
Are you up to riding the crypto wave in India?