Cryptocurrency - Hemsworth Consulting

The cryptocurrency market has seen unprecedented growth in the wake of the pandemic as Indian’s scramble to look for new sources of income during these uncertain times. More than 10 million new investors have started trading and investing in Crypto in 2021 itself, globally.

Even though Cryptocurrency is legal in India, there are no regulations for it as of now. It also cannot be used as a legal tender of money in India. The most common types of Cryptocurrencies Indians are investing in are:

Bitcoin
Ethereum
Tether
Cardano
Dogecoin

Until quite recently, the only way to invest in Crypto was through one-time purchases. However, investors are turning to a new method of investing in crypto and that is investment via a Systematic Investment Plan.

A Systematic Investment Plan or SIP is a way of investing wherein the investor invests a fixed amount of money at recurring time intervals. The investments can be done daily, weekly, monthly, yearly, etc.

How can one invest in Crypto through SIP?

In the past few years, a number of online platforms have emerged that provide a secure transaction environment for investors to invest in Crypto through SIP.

However, due to the highly volatile and risky nature of the market, these platforms only offer SIP options in Bitcoin and Ethereum for now. The top platforms for Indians to invest in crypto through SIP are:

Bit droplet by Bitbns: Investing starts at INR 100 per interval. This platform
charges 0.25% per trade.
Zeb by ZebPay: Also starts at INR 100 per interval. This platform charges 0
buying fees.
Uno coin: Investors can invest as low as INR 50 per interval.

What are the benefits of investing in Crypto through SIP?

Smart investors have realized the benefits of investing in crypto through SIP and, as financial awareness and literacy increases, more and more investors are opting for this method instead of the one-time buy/sell method.

Risk Mitigation: The crypto market is a highly volatile and uncertain market. When one invests in crypto through SIP, the small amounts of investment are branched out over a long time period. This helps average out the purchase costs
and mitigates the risk involved in investing in a fluctuating market.
No need to monitor the market: Due to the nature of SIP investments, an investor does not need to time or monitor the market for lowest prices. Any risky purchase gets balanced and averaged out over time.
Convenience: Once you set up a Systematic Investment Plan with auto payments, you can rest easy. You do not need to go through the hassle of monitoring and purchasing again.
Affordable: With platforms allowing SIP options at rates as low as INR 50-100, even investors who are just starting out their investing journey and do not have a large amount of money, can afford to invest in Crypto easily.

What do the numbers say?

Even with the highly volatile nature of the Crypto market, it has been observed that Bitcoin has been one of the highest performing assets with high returns in the long run. With a long term Systematic Investment Plan, the expected returns are very favorable for the investors.

For example, if one invests 100 rupees in bitcoin per day for a certain number of years, the expected return would be somewhere around INR 487K in 3 years and INR 1.2M in 5 years.
Similarly, If one invests 500 rupees in bitcoin per week for a certain number of years, the expected return would be somewhere around INR 336K in 3 years and 786K in 5 years.

A Systematic Investment Plan does seem to be the new and smarter way forward when it comes to investing in Cryptocurrency. This method has more benefits than drawbacks and the expected long-term returns look promising.

How can one invest in Crypto through SIP?

What are the benefits of investing in Crypto through SIP?

What do the numbers say?

References:

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