India’s crypto SIP boom. Is it time to invest?
The first SIP mutual fund was established in India about 30 years ago, and today the sector is valued at over INR 1 lakh crore and growing by nearly 10,000 crore every month. putting big money into high returns, low risk and tight controls One of the most sought-after types of assets for the average investor today is SIPs in mutual funds.
SIP has demonstrated over time that it can reduce volatility, whether with stocks or mutual funds. The investment technique, which capitalizes on the power of compounding, has helped investors generate profitable returns, especially when reinvested earnings are involved. While returns and risk are the primary determinants of investment decisions and are closely intertwined, a high return, low risk investment is a desirable option for many investors. One of the most popular asset classes that has recently garnered a lot of investor interest in cryptocurrency.
Apart from skyrocketing market valuations, amazing breakthroughs, real use cases based on Blockchain technology and the confidence shown in the sector by the investment community including the institutional type all over the world were some of the -one of the main growth factors. Nevertheless, despite this huge growth and popularity, volatility has been a cause for concern, leading many avid investors to take a cautious approach. By following the SIP method in cryptocurrencywhich is quite similar to investing in stocks and mutual funds, can help provide better risk-adjusted returns even during a tumultuous market.
Volatility is a normal part of market activity and is considered beneficial as it contributes to market correction and provides opportunities for profit. Intelligent allocation at regular intervals, such as daily, weekly or monthly via SIP, can help investors combat volatility. However, investing in a lump sum in the face of excessive volatility may not be a good option. Cryptocurrency SIP, which is based on a methodical approach, involves the systematic investment of a certain amount of money at predetermined intervals in a specific cryptocurrency or a basket of cryptos of the investor’s choice .
Why should you fund your Systematic Investment Plans (SIPs) using cryptocurrency?
Systematic investment Plans, which are similar to stocks and mutual funds, offer a safer and preferable option, especially for cautious and novice investors. The investment approach allows an investor to benefit from a better entry price even in the face of significant volatility through regular and timely purchases.
Benefits of Cryptographic SIPs
- Mitigate volatility – With a crypto SIP, an investor often buys certain amounts of bitcoin on a monthly basis at different prices, allowing them to mitigate the effects of volatility. Although SIPs can be used to invest in cryptocurrencies on a daily, weekly or monthly basis, given the recent volatility, investors are advised to choose a daily or weekly frequency rather than a one-to-one window. month.
- Pocket Friendly – SIP whether it’s stocks, mutual funds or cryptocurrency, have historically proven to be incredibly profitable ways to accumulate wealth. Depending on their preferences, investors can start their investing journey with as little as $75 or $100 per day and can choose to invest daily, weekly or monthly.
- Automotive Investments – When a SIP plan is in place, a predetermined sum is automatically deducted from a person’s account at necessary intervals. In addition to reducing volatility, this method also makes it unnecessary to consider every purchase before making it. To passively grow a strong cryptocurrency portfolio, one can also set up numerous SIPs on various cryptocurrencies.
- Leveraging the Power of Compounding – Compounding can successfully help reduce cryptocurrency volatility. You can reinvest your earnings via the SIP in addition to making regular investments to build up wealth. In this case, one can benefit from the rewards produced by the long-term lock-in of investments by using the power of compounding.
- Disciplined Investing – SIP can support the development of a regular saving habit by promoting disciplined and consistent investing. The SIP payment is automatically withdrawn from his account each month as soon as the salary is posted to the account when a monthly direct debit plan is in place, much like EMI payments. This helps provide passive income that can be used for new investments.
Similar to mutual funds and stocks, cryptocurrency SIPs should be used as part of a long-term investment plan. Although it may take some time to see benefits, it could provide greater benefits while reducing risk. The long-term view helps reduce the risks associated with impulsive behaviors investment decisions, particularly in the wake of significant market volatility, in addition to maximizing profits through capitalization.
To be able to make the best investment choice at the right time, it is crucial to understand and analyze cryptocurrencies as with any other type of investment. By investing methodically in a single token or a variety of tokens, investors can diversify their holdings and build a crypto portfolio through sip in addition to simply taking the plunge. While experienced investors with higher risk tolerance may choose to consider stablecoins like Tether, Polygon, and Solana, newbie investors may want to focus on well-known tokens like Bitcoin and Ethereum.