Back in 2009, Bitcoin was just a cool trend for millennials and tech enthusiasts. Even though it was new, techies and futurists were predicting a bright future for crypto assets, which are now grabbing the attention of millions as an investment option. Crypto assets work on blockchain, which is basically a way of recording and sharing information that no single organization controls.
In just under a decade, crypto assets have turned into a trend that everyone is talking about. Some people are starting to see them as a possible alternative form of investment. But that’s still a bit of a stretch.
In India, the Supreme Court has given a thumbs up to crypto assets, which has put the market in a tricky spot with the Reserve Bank of India. Still, this legal backing has really helped boost the digital assets market.
This has caught the attention of many investors. Startups in the Indian crypto scene are noticing this big trend. However, many people in the country still find crypto assets pretty foreign, and that’s likely to stay the same until clear regulations and classifications come into play.
Here’s a straightforward step-by-step guide on how to invest in crypto. So, let’s take a simple look at crypto trading.
What to Know Before Investing in Crypto Assets
First of all, if you want to get into crypto, make sure your finances are sorted out. This means having an emergency fund, keeping your debt in check, and ideally having a mix of different investments. Your crypto investments can just be another piece of your overall portfolio, hopefully boosting your total returns.
Keep these five other things in mind as you start investing in crypto assets.
1. Understand What You are Investing in
Just like with any investment, make sure you know what you're getting into. If you're buying crypto assets, take the time to read their whitepaper since there are tons of assets available. Each assets work differently and new ones emerge all the time. You need to figure out the investment reasons for every trade you make.
Some popular assets are Bitcoin, Ethereum, Solana, Dogecoin, and Tether (which is a stablecoin). So before you invest, get a clear idea of what you might gain or lose. If your investment doesn’t have any backing from an asset or cash flow, it might end up being worth nothing.
2. Remember, the Past is Past
Don’t base your investment decisions solely on how a coin has performed before. The key question is whether it will grow in the future.
3. Watch That Volatility
Crypto is one of the most unpredictable markets out there. Prices can shoot up or drop in seconds, even because of something as simple as a social media post. For experienced investors who trade quickly or have a deep understanding of market trends, this kind of action can be a golden opportunity.
But for beginners, it’s like walking through a minefield. That's because when prices swing wildly, new traders often panic and sell at a loss. So, be prepared for emotional ups and downs.
4. Manage Your Risk
If you’re trading crypto, managing risk is crucial, especially with its wild price swings. For long-term investors, this might mean holding on no matter what. Short-term traders, on the other hand, may set strict rules, like selling if prices drop 10%, to avoid bigger losses.
Beginners should start small, using only part of their trading funds while keeping some as a backup. Remember, you can’t trade without money in reserve. Managing risk can be tough emotionally, selling at a loss stings, but it’s often better than risking a total wipeout. Smart risk management helps you stay in the game for the long haul.
5. Don’t Invest More Than You Can Afford to Lose
Don’t put money into crypto that you can’t afford to lose. Crypto is risky, and if things get worse, you don’t want to be left in a tough spot. Instead, keep essential funds in safer places or pay off high-interest debts for guaranteed savings.
Also, don’t ignore security. Crypto can be a fun and exciting part of your investment plan, but it shouldn’t be your only plan. Diversify, stay cautious, and always think long-term.
Also read: Portfolio Management: How to Manage Your Crypto Portfolio for Higher Profits?
How Do You Invest in Crypto Assets?
Step 1: Understand and Spread Out Your Investment
Before diving into crypto, it’s important to understand what you are investing in. The crypto market is super volatile, so only allocate a small portion of your money into it. Experts suggest keeping it to about 5–10% of your portfolio. Remember, crypto investments can either skyrocket or hit rock bottom, so do not put all your eggs in one basket.
Step 2: Pick Your Crypto Asset
Here comes the tricky part; choosing which crypto to invest in. You have probably heard of Bitcoin, Ethereum, or even Dogecoin, but did you know there are over 5,300 digital tokens out there? Bitcoin is the first and most traded crypto asset, but sometimes, lesser-known coins outperform the big ones. Do your homework before picking any.
Step 3: Learn About the Crypto Asset
Each crypto has its unique fundamentals. Things like which blockchain it’s built on, how it’s mined, its accessibility, and the community behind it all matter. Dig into the details before making your move.
Step 4: Pick a Trusted Exchange
You can’t just walk into a bank to buy crypto. You will need a trusted crypto exchange like KoinBX to get started. Keep in mind that these platforms charge fees for buying and selling. Also, trading crypto is super anonymous, so be cautious and stick to reliable platforms.
Step 5: Secure Your Crypto
Your crypto lives in a digital wallet—not the leather kind, but software that stores your private keys. Wallets can be hot (online) or cold (offline). Hot wallets are convenient, but cold wallets are safer from hackers. Choose what works best for you based on your security needs.
Step 6: Hold Tight and Know When to Sell
Crypto is not a quick-rich scheme. It’s a long-term game, and you need patience. Keep an eye on your investments and gain profits when the time feels right. The market is young and full of hype, so be careful of scams and overhyped tokens. Always have a strategy for when to sell.
Final Thoughts
Investing in crypto assets can feel like stepping into the unknown, but with the right preparation, it can also be rewarding. Start by understanding the basics, managing your risk, and doing thorough research. Remember, the crypto market is volatile and still evolving, so proceed with caution and patience.
Most importantly, treat crypto as a long-term investment. It’s not a quick scheme to get rich overnight. By staying informed and sticking to a solid plan, you’ll be better equipped to navigate this exciting path of digital assets.
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Disclaimer: Any financial and crypto market information shared should not be considered investment advice. It is for informational purposes only. Conduct your own research before making investment decisions. Crypto trading is unregulated and highly risky. There may be no regulatory recourse for any loss of such transactions.
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