Nearly everyone has heard of cryptocurrencies by this point, but the vast majority do not fully comprehend what they are. Cryptocurrency and its underlying technology have the potential to revolutionize the financial industry as well as numerous other sectors.
Investors need to understand the fundamental crypto investment strategies so that they can invest in a manner consistent with their risk tolerance. Therefore, it is worthwhile to learn a little bit about cryptocurrency.
So, What is Crypto?
Crypto (or crypto currency) is a digital payment system independent of banks for transaction verification. It is a peer-to-peer system that allows anyone, regardless of location, to send and receive payments. The payments exist solely as digital entries in an online database that describe specific transactions. When cryptocurrency funds are transferred, the transactions are recorded in a public ledger.
Cryptocurrency derives its name from the use of encryption to authenticate transactions. This means that storing and transmitting cryptocurrency data between wallets and public ledgers requires sophisticated programming. Encryption is intended to provide security and safety.
Bitcoin, which was created in 2009 and remains the most popular cryptocurrency today, was the first digital currency.
How Do You Invest in Crypto?
First and foremost, if you intend to invest in cryptocurrency, you must have your finances in order. This requires an emergency fund, a manageable level of debt, and, ideally, a diversified investment portfolio.
Your crypto investments can become an additional component of your portfolio, contributing to an increase in total returns.
Now, What are the steps to follow in a cryptocurrency investment platform like Carret?
Step 1: At first, you need to download the Carret app:
The first step in trading 100+ cryptocurrencies is downloading our app, where you can instantly buy, sell, and HODL leading cryptocurrencies. This app will also assist you in storing your cryptocurrencies in the most secure crypto wallets to earn a high APY.
Step 2: Complete the Signup process:
To begin investing in cryptocurrencies, you must register for this free app. Signing up for this app takes less than a minute with PAN and Selfie. After completing KYC, your account will be ready for investing.
Step 3: Link your bank account:
Once you have an account, you must link it to your bank account. There is no cause for concern. We work hard on ensuring the security and confidentiality of all the information you share with us.
Step 4: Getting Started:
You’re prepared! Simply select your preferred cryptocurrency, click the “buy” button, enter the amount you wish to purchase and confirm. That is all. Your investment will immediately be reflected in your portfolio.
Here’s the link to the app:
How to Choose the right Cryptocurrencies to Invest in?
When deciding which cryptocurrency to invest in, several considerations must be made. There are thousands of different coins to choose from, making navigation difficult at times.
Therefore, it is essential to consider these factors when selecting your next investment.
The current market capitalization is one method for selecting your next cryptocurrency investment. This will not only show which cryptocurrencies are currently ranked highest but also their value curve. Be aware of global events that impact the prices of cryptocurrencies.
Supply of Coins:
Always examine the coin’s supply to determine if it is limited. Determine how many coins are currently in circulation and how many can be mined. This will have a long-term effect on the price of the cryptocurrency.
Always verify that the cryptocurrency you are considering investing in has a white paper. The white paper is a document that contains information about the coin, its uses, and purposes, as well as the underlying technology.
This will not only provide you with important information about the coin but also confirm its authenticity. In today’s crypto market, it is important to be especially vigilant about the legitimacy of coins and brokers.
The utility of a cryptocurrency is an important factor that can make all the difference in its value. In the coin’s white paper, its use cases are detailed. This is a crucial factor in luring investors and users. Therefore, it is a plus for your investment if it has some high-quality use cases or great potential for more use cases.
What are Different Crypto Investing Strategies?
Buy and hold (HODL):
Buy and hold is a passive, long-term investment strategy utilized by most investors. This strategy can help you maintain a steady portfolio regardless of market fluctuations. Focusing on value creation, this crypto investment strategy can help you achieve your long-term objectives. This buy-and-hold strategy is commonly referred to as “HODL” in the cryptocurrency world. It translates to “Hold on for dear life.”
Value investing is a crypto investment strategy that assumes the majority of assets are undervalued, meaning their actual value is greater than their current price. If you’ve ever heard of the investor Warren Buffet, he’s the one who popularised value investing.
Value investing entails locating an asset that you believe is trading for less than its value. You would then acquire this asset with the expectation that its market price will rise over time.
Identifying which assets are truly undervalued is the primary challenge. Profiting from this strategy requires a significant investment of time, effort, and research.
Dollar-cost averaging (DCA):
Dollar-cost averaging (DCA) is one of the most popular investment strategies for cryptocurrencies. Similar to SIPs, DCA allows you to invest in increments at regular intervals. It mitigates volatility by averaging the purchase price of the cryptocurrency. It eliminates the need to attempt to time the market.
Buy low, sell high:
Buying low and selling high is a strategy in which you purchase something at a lower price and then sell it for a higher price. It may appear to be a simple cryptocurrency investment strategy. However, it is difficult to determine whether the price is sufficiently low to buy or sufficiently high to sell.
Consequently, it is essential to utilize indicators that measure the price action of cryptocurrencies. The weekly or monthly moving average is one of the most simple-to-use indicators. There are additional indicators available for selection.
Investing in cryptocurrencies in their early stages with the expectation that they will appreciate over time. However, this can be a dangerous endeavour, so research is essential. Various cryptocurrencies may be affected by distinct price-driving growth factors.
If you are seeking a long-term investment opportunity with enormous returns, this is it. To be able to identify such an opportunity and locate the appropriate cryptocurrency, you must conduct extensive research.
A well-balanced cryptocurrency portfolio invests in the asset class as a whole. It intends to profit from the expansion and adoption of the cryptocurrency market as a whole. Therefore, the losses sustained by a single cryptocurrency will not significantly impact the portfolio as a whole. Periodically, a portfolio must be rebalanced to accommodate market fluctuations.
An unbalanced portfolio is one with a disproportionate allocation to a subset of cryptocurrencies. Investing in only those cryptocurrencies based on your research. It may not always be prudent to balance the portfolio, even though it is conventional wisdom to do so.
Investing in cryptocurrencies is a difficult endeavour. The volatility and months with a downward trend can test your patience. However, if you adhere to your cryptocurrency investment strategy, you can accumulate wealth over the long term. Numerous investors opted for the HODL strategy and have been extremely profitable.
This blog serves as an introduction to the best cryptocurrency investment strategies for beginners. If you do not wish to invest on your own, we have a solution for you.
Explore our flagship product 24Carret, which can simplify your work and earn you up to 17% APY on your selected crypto holdings.
Frequently asked questions
Q1: Which cryptocurrency investment is best for the long term?
It is believed that cryptocurrency is a high-risk, high-reward asset. It is undeniable that the returns could be profitable if invested intelligently and strategically, but it would be foolish to enter the crypto markets with the expectation of making quick money.
There are a variety of strategies for investing in cryptocurrencies intelligently. Among the most popular is the HODL strategy. Before investing in coins, one must always conduct research on their fundamentals. Strong fundamentals indicate a solid investment.
Q2: Which cryptocurrency is safe to invest in?
As a beginner, you may wish to learn to adapt yourself to the volatility of this asset class; therefore, investing in top-tier cryptocurrencies may be prudent.
Blue chip cryptocurrencies are cryptos with a lengthy history, and solid fundamentals, and are regarded as more stable than smaller cryptocurrencies. These digital assets consist of Bitcoin, Ethereum, and Stablecoins like USDT and USDC.
Q4: Is cryptocurrency investment legal in India?
According to the recent Budget 2022, the Indian government has announced a 30% tax on cryptocurrency gains and a 1% tax deduction. Cryptocurrency trading is unregulated.