4 Tips By Experts On How To Navigate Crypto Investing At Web3 and Tech and Innovation summit 2023 held in Bangalore by Entrepreneur India, experts from the crypto industry came together to discuss factors crucial to investing
By Priya Kapoor
Opinions expressed by Entrepreneur contributors are their own.
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.
After reaching an all-time high of $68,789 and $4444.53, in 2021, the major cryptocurrencies like Bitcoin and Etherium nosedived by as much as 60% in 2022. The year also saw the market cap for cryptocurrencies drop to $810 billion from $2.18 trillion a year ago. In 2023, bitcoin was seen climbing up once again. On April 11, it breached past $30,000. At Web3 and Tech and Innovation summit 2023 held in Bangalore by Entrepreneur India, experts from the crypto industry came together to discuss factors crucial to investing.
Invest in cryptos like VCs invest in startups
The first advice doled out by the experts was to consider crypto investments akin to investments made by VCs in startups. Says Srinidhi Moodalagiri, CPO, Flippy, "There is a lot of volatility and risks involved in crypto, but one has to understand what is driving the price of crypto. Within crypto, fundamentals are equally important. But there is a lot that goes on top of fundamentals. Crypto investing is not very different from how VCs look at startups investing. As an investor in crypto, you should look at this similarly to VCs' investment in startups as they are very risky."
Allocate according to your risk appetite
Panelists believed that within crypto, there is scope of diversification and from an allocation perspective, one should be aware of risks and risk appetite, "It's very hard to justify or give a certain percentage in one's portfolio. It differs from investors to investors. However, for an average investor, 5 percent allocation of their portfolio sounds to be ideal," adds Moodalagiri.
Stick with narrative
As crypto matures, more and more retail users come into crypto; they need simpler investing products to invest in. "Historically, those who have come into crypto trading class, wanted to leverage the volatility and make money in the short term. But as the asset class matures, more and more value and wealth is created in the longer run and for that you need systematic investment products. The important part is investing anywhere requires rules, discipline, and some systematic route to investing," says Edul Patel, Co-founder and CEO, Mudrex.com.
"Also as crypto has matured over the last couple of years, clear narratives have developed inside of crypto. Three years ago it was just Bitcoins, Altcoins. But today there are narratives like smart contracts, NFT platform, gaming universe. A wide variety of narratives have opened up. It is similar to categories within stocks. Categorisation has made it easier for people to know that what narrative I am aligned with, this part of crypto should grow and become better and once they are aligned with they should be able to pick and choose and invest in those and not necessarily do their own token level due diligence of where should they invest in," adds Patel.
Evaluate and underwrite exchanges as well
In the wake of the failure of exchanges in the recent past, experts think that exchanges play a key role in adoption of crypto and that there is a massive transition towards people becoming aware of non-custodial solutions and wanting to store their assets themselves.
Comments Kumar Gaurav, founder, Cashaa, "Without exchanges, adoption of crypto cannot happen. It's the first entry point to get into the feet of the crypto world. We have to promote good exchanges as the market is still unserved."
"There are custodian solutions and non custodial solutions. When you talk about custodial solutions you are trusting third parties to take care of your crypto. In a non-custodial solution, however, you are the only person who has access to your assets. Both come with pros and cons. A lot of players' getting liquidated and lost user funds by not following the right practices. Therefore, it's super important to evaluate and underwrite exchanges as much as you underwrite the asset," says Moodalagiri.
Concus Patel, "In an era where banks are failing, it is important to know where your money is going whether it is in the form of crypto or otherwise. Exchanges play a critical and pivotal role in firstly making sure people are getting into crypto, where their money is held and thirdly who is managing it for them."
