Cryptocurrencies have garnered a lot of interest among retail investors in India. Indeed, the year 2021 has been an important one for them. However, the recent discussions on ‘Cryptocurrency and Regulation of Official Digital Currency Bill’ has led to lot of speculations.
The bill "seeks to prohibit all private cryptocurrencies in India”, which is yet to be discussed in Parliament.
For individuals looking to invest in cryptocurrencies in 2022, experts said that decisions must be based on smart thinking, factoring in volatility and sudden market crashes.
Here are key tips to follow:
Understand the volatility
In a conversation with CNBC-TV18, Mohammed Roshan, CEO & Co-founder at GoSats said that 2022 is going to be a volatile year for crypto and one could witness a significant correction in the prices.
Hence, it’s vital for investors to understand this.
“I'd recommend traders to focus on the more prominent cryptos that have a strong history and not get into tokens they don't understand with price movements that seem to be too good to be true. When the bear market hits, these underperforming tokens get washed out leaving investors in despair. Even with prominent tokens, it's advisable to only invest what they can afford to lose,” Roshan said.
Maintain a healthy portfolio
According to Sathvik Vishwanath, CEO & Co-founder at Unocoin, it is important to maintain a healthy portfolio which recommends young investors having up to 10 percent of their exposure to crypto and investor veterans to not expose more than 5 percent to cryptos.
“For the investors who are choosing to take trading as their full time career, they will have to be abreast with fast phased developments in the industry and understand different new technologies like DeFi and NFTs etc,” Vishwanath said.
Never take a loan or use credit card to invest in cryptocurrencies
Taking a loan or using a credit card is a bad idea for investing in crypto, Vishwanath said.
“These markets are highly speculative and no one has obligation to buy back these cryptocurrencies from the investors in the future,” he said.
Never invest without doing a background check
Before making the financial investment decisions, developing an understanding of the subject by comprehensive research on credible platforms and educating oneself is the basic core fundamental, according to Sumit Gupta, Co-Founder and CEO at CoinDCX
"New investors who are building their knowledge base can invest in more popular crypto-assets like Bitcoin, Ethereum, etc. with the mindset to understand the underlying technology. It is pertinent to take such steps to make informed decisions for investing cautiously and safeguarding the crypto investments," Gupta said.
The right mindset is to become knowledgeable about the subject and take a long-term approach.
Stick to crypto tokens with high market cap
The approach should be to stick to high market cap tokens and creating an ecosystem aware of the risks related to it. Investors should not look at crypto from a get-rich-quick perspective, Gupta told CNBC-TV18.
Disclaimer: The views and investment tips expressed by investment experts on CNBCTV18.com are their own and not that of the website or its management. CNBCTV18.com advises users to check with certified experts before taking any investment decisions.
(Edited by : Aditi Gautam)
First Published: IST