Bitcoin’s value has decreased by more than half its value since its peak in November 2021, which caused the entire cryptocurrency market to fall down. Popular crypto assets like Terra (LUNA) and TerraUSD (UST) experienced steep declines that may have spooked investors.
In 2021, when both these cryptocurrencies and others enjoyed their honeymoon, nobody could have thought they would face a fall like this. The weak sentiment spread across the cryptocurrency market resulted in investors withdrawing money, causing Tether (USDT) to lose its peg to the dollar.
In this blog, we’ll know what cryptocurrencies are and how they work followed by the reasons for the ongoing crypto crash and how to invest in the Indian cryptocurrency market safely.
What is a cryptocurrency?
Cryptocurrencies are virtual or digital currencies which are secured by cryptography. This makes it nearly impossible to double-spend or counterfeit. Most cryptocurrencies run on decentralized networks based on blockchain technology i.e., a distributed ledger enforced by a distributed rate network of computers.
The most prominent feature of cryptocurrencies is that they are generally not issued by a government or a central authority, rendering them free from government interference or manipulation. However, recently many countries such as India and China have launched their own Central Bank Digital currencies that work on blockchain technology.
Is Investing in Cryptocurrency Safe?
The cryptocurrency market has seen the good side as well as the worst side of the market, be it post-Russia-Ukraine effects, Terra-Luna crash, FTX collapse, or tightened tax regulation; it has witnessed the roughest storms during the past few years.
The year 2023 gave the crypto world a fresh start, showing positive signs of recovery which seems to be gradually improving in 2024. Crypto investors believe that in situations like this, investing in stable digital currencies like Bitcoin and
Ethereum in SIP format is a safe choice. Crypto experts think investors should invest just 5% of their cryptocurrency exposure in their overall portfolio. The most important thing is to invest only a minuscule amount and not all your life savings, as the crypto market is highly volatile, and you may lose everything.
Top Reasons for the Crypto Crash
Several other crypto whales have faced liquidations following Bitcoin’s sudden drop. These forced sales have increased the market decline, causing widespread concern among investors.
The recent crypto crash is attributed to multiple adverse events:
- Economic Uncertainty and Political Changes: The US Federal Reserve’s signals of further economic uncertainties and the UK’s political shift as the Labour Party gained the majority have added to market volatility.
- Whale Sell-Offs: The German government, holding around 40,000 Bitcoins, has triggered a wave of sell-offs. On-chain data indicates that Bitcoin whales have offloaded over 30,000 BTC in the past month.
- Declining ETF Demand: The demand for US-based spot Bitcoin ETFs has waned recently.
- Mt. Gox Payouts: After over a decade, Mt. Gox has started distributing more than 100,000 Bitcoins, valued at over $7 billion, to its customers.
How To Invest In Indian Cryptocurrency Market?
You can follow the following easy steps to invest in India’s crypto market.
Step 1:
Select the best cryptocurrency: Choose a cryptocurrency you wish to invest in. Like any other asset class, crypto has its own fundamentals, different blockchain networks back them, and intrinsic value and mining techniques. Make sure that you research and analyze before investing, since the crypto market is highly volatile.
Step 2:
Select a crypto exchange: After you decide on a cryptocurrency, it’s time to find a perfect crypto exchange platform. A functional account in a crypto exchange is necessary for buying and selling cryptocurrencies.
Step 3:
KYC: After deciding on a crypto exchange, you need to register by providing details like name and address and completing the KYC formalities. After setting up your account, you’re ready to invest in cryptocurrency.
Step 4:
Choose payment mode: When buying a cryptocurrency, you need to select a payment option that you feel comfortable with. You can choose peer-to-peer, bank transfer, online payment mode, or a crypto wallet.
Step 5:
Purchase cryptocurrency: You can smoothly buy your selected cryptocurrency after adding funds to your account. All you have to do is press on the “buy” tab, and you can easily buy the cryptocurrency of your choice.
Step 6:
Storage: After you purchase the crypto coins, remember to store your currencies securely. They are not regulated, and you must keep them safe, as there’s always a risk of hacking or theft. You can check out the crypto storage options from here.
Step 7:
Selling cryptocurrency: Selling is as important as buying as it helps you make money from investing. You can sell the cryptocurrency the same way you purchased it; just click on the tab “sell” in your portfolio. Depending on your choice, you can fully or partially sell your crypto investment but don’t forget to book your profits promptly.
Lastly!
Given the uncertain environment and slow recovery from the macroeconomic situation worldwide, it is wise to observe the crypto market prudently. Do not make reckless decisions, as it is an excellent time to observe and analyze the market closely.
One may never know, but the observation will eventually help the investors to make smart decisions and might have a favorite digital asset at a fair value once the chaos situation fizzes out completely.
