I have talked briefly about How to Start Investing in Cryptocurrencies and Should You Investing in Cryptocurrencies in 2022. If you haven’t read those articles, I would highly recommend you to read them once.
Now as you have enough clarity about the Cryptocurrencies, I will talk about the Cryptocurrencies Exchanges and will try to find the Best Cryptocurrencies Exchanges to Invest in 2022.
So let’s get started.
Best Cryptocurrencies Exchanges to Invest in 2022
Why I am highlighting this? when vault gives you this 12.68% commission, it is taking your money and putting it in the liquidity pool. now it is a complicated exercise how to open a staking node and cultivate the yield on it. retail investors should not go there. but assuming someone is giving 12.68%, it is a scam. it is like saying that hedge funds in the current world are giving very high returns 25%-35%. even Up to 50% returns year over year. so by that logic, even all hedge funds are scams. so it doesn’t make sense to understand that, whatever organization you are giving money to, a simple understanding of how these banks are using the money on the back end.
On the flip side are some of the exchanges featured on the exchange. Simply you are allowed to buy and sell cryptocurrencies. so if your objective is only to move cryptocurrencies around then, let’s say if you buy a bitcoin on a certain exchange and your objective is to transfer it to your wallet. You probably don’t need This banking facility as you will not be able to make fixed deposits on these exchanges. so which exchange to choose if you want to keep your money on the exchange is your call. Wallet and make a fixed deposit then something like the world works very well if you don’t want to take advantage of the facilities like fixed deposit then you can go to another exchange. it is not a problem.
Sanity Checks Before Choosing Exchanges
There are some common sanity checks which You must remember about all these exchanges. so if you are deciding to open an account with any exchange and virtually all you need is some basic paperwork. do your KYC and provide some basic documents and your account will be opened. The only four factors you need to remember before opening is the account number and the exchange you are using.
Insurance for Cryptocurrencies
Does your exchange have insurance on its back end? because many times in the past some exchanges have been hacked and people e lost their cryptocurrency. but if the exchange is insured, you will get your money back. so please check if the exchange has any insurance facility. this is the first important point. now you will be a little upset. you will say that, ok how often has this hacking happened in past?
The hacking of cryptocurrency exchanges is very rare and this can happen in your banks also. for example, if you have an account with any Indian bank then, what is it that bank got hacked? the bank is liable to pay you? they are liable to pay you only five lakh rupees. The insurance that the bank provides to you. if something is stolen in your locker or if your money is stolen and it cannot be recovered by the bank. they will reimburse you up to a maximum of five lakh rupees. so that again the same is what the rule says.
Liquidity Feature
The other key feature you need to remember about an exchange is the liquidity feature. so the liquidity feature simply means that the exchange sources liquidity. so for example you buy bitcoin and your order is not executing for five hours so it is a liquidity issue. so please check how liquid the exchange is. is it easy to buy and sell cryptocurrencies and what spread they are giving? For example, you might have noticed that some exchanges give bitcoins. I am quoting a hypothetical price, they allow you to buy bitcoins for Rs 30 lakhs. but when you sell they allow you to sell it for Rs 29.9 lakhs. If allowed, what is the spread is Rs 10,000 so please know about this. Don’t worry and the more important thing is the spread. on which spread is the difference between the buy price and sells price. that spread is more important than absolute buy or absolute sell price. so please remember this liquidity feature.
Who is Backing Those Exchanges
The third fact also Comes who is backing those exchanges. if big investors are in play, if they have got formal VC funding, if there are institutional players and there are big designated players then that exchange will be a reliable exchange. there will be many exchanges that you can fourth and the last thing can hold on to. there is extra convenience and UI UX if you want to buy things on the dip. for example very few exchanges allow you to do that. you would have used something called gtt. so gtt dev feature. So to say you can go and find out similar features to the world. it allows it if other exchanges are also offering it you can call that Whether to open an account linked to any other platform and if that facility is available? So if you understand, so not by the specific exchange but yes if these four features are being satisfied then just open your account in that particular exchange.
How You Should be Investing in Cryptocurrencies?
Now let’s talk about part three of this article. where I will help you understand and break down how you should go about investing in cryptocurrencies. also, we will discuss what are the expected returns and risks you are taking while investing in crypto. So point number one, my advice to you is that cryptocurrencies should be a part of your overall portfolio. for example, suppose if you have one lakh rupees please don’t go and invest five thousand in cryptocurrencies if you are a new investor. Only take five more than Rs. As the percentage position, you become more and more confident, you can increase this position. in my case, I am currently sitting at around 14 15 in my overall portfolio of crypto and I will move it to 20. that’s it. This is where I will stop.
Please understand the point of view that you are using cryptocurrency as an asset class investment. You are not making your entire investment amount in cryptocurrencies. so this is the first piece of advice I am talking about. I would say please invest in sensible crypto at the beginning. if there are two cryptocurrencies that you should study more about, it should be bitcoin and if you understand the fundamental value it should be Ethereum. Only then go and invest if you are having trouble understanding the fundamental value then don’t invest. Whether or not someone else is telling you that unless you see the value in that particular cryptocurrency yourself. you will make a lot of mistakes because you will not be able to handle volatility.
This brings us to the related discussion that many Often times people say that, cryptocurrencies are actually extremely volatile so they are bad. no, it is not. cryptocurrencies are like startup investments. they are justified why young give them some time to grow as the asset class matures, volatility automatically. This has happened to every single asset class in the history of mankind. the most important aspect regarding cryptocurrency investing is that you must understand the risk-reward equation. so much of cryptocurrency to understand the risk-reward equation in very simple words. easy This means that for example if you are investing 100 rupees in cryptocurrencies right now, then the maximum loss you will suffer will be hundred rupees. if this is the maximum what will happen, if the crypto market survives in the next 10 years, you No need to run a mathematical model but it is very likely that a hundred bucks will become a thousand bucks at least. now if this risk-reward equation looks favorable to you then invest a little money. if it doesn’t look good to you, Do whenever you get that clarity. it could be after the rules, it could be 20 years from now, it could be 50 years from now. so whenever you get that clarity you can invest this. investment It’s not a race, it’s about conviction and whatever asset fits in with the risk-reward equation that you have in mind.
So in a nutshell these are the three key points. I’ll leave you with the number one fundamental real of cryptocurrencies. There is value, there is no denying that this is why it has survived a decade in a highly volatile environment. Now, people have thrown wars over global macroeconomic conditions. There is a downturn in this and a bunch of various different problems, but cryptocurrencies have survived. so we need to give it a bit of merit, which is point one. point two that the majority of cryptocurrencies are bad. there is absolutely no denying that is that most of the stocks are also bad. so this is our goal because investors should be our goal. to identify only good cryptocurrencies and invest in them. this is the third and lastly please understand the underlying value of cryptocurrencies. It’s a race. Whenever you understand that it takes a bit of space according to your risk-reward equation analysis.
So I hope you enjoyed the article. please hit the like button and if there are some questions unanswered through this article, please comment below. I’ll spend an hour answering doubts. I’ll try to answer as many questions as possible. so thank you very much and I’ll see you in the next informative article.
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