Crypto Sips and their benefits

Systematic Investment Plans (SIPs) are a real boon. They allow you to invest in mutual funds and other investment schemes through smaller periodic payments. This makes investing more accessible as you no longer need large amounts of money to start investing.

SIPs also automate the investment process. Once you start a SIP, money will be automatically debited from your account at regular intervals. In addition, your investments are managed by an expert fund manager. This makes SIPs perfect for novice investors or those who don’t have time to follow the market and make complex investment decisions.

These features also make SIPs favorable for the cryptocurrency industry. Many investment firms now offer SIPs that help clients invest in the burgeoning cryptocurrency market. It allows investors to take advantage of this lucrative asset class, even if they lack the time, experience, or capital to make large cryptocurrency transactions on their own.

Let’s see what crypto SIPs are and how they work.

Cryptocurrency SIPs

Crypto SIPs work just like their traditional counterparts. Instead of making a large purchase, SIPs allow you to invest in the cryptocurrency market through smaller payments over a long period of time. This also helps you average out the purchase price of the token and reduce the impact of volatility.

Since the investment amount remains the same, you buy fewer tokens when prices go up and more tokens when prices go down. This allows investors to offset market volatility and profit from it.

Benefits of cryptocurrency SIPs

The first and most obvious benefit of a crypto SIP is that you can start as small as you like and decide on the frequency as well. As long as your account has enough balance, everything will happen by itself.

Another significant benefit of a crypto SIP is that since you are playing the rupee cost averaging strategy, your emotions are not guiding your investment decisions. Neither greed nor fear can alter the amount you invest or the time of purchase.

Also, unlike direct crypto trading, you can set these investments on autopilot mode and forget about them. You can do this for multiple tokens and easily diversify your portfolio.

SIPs can also protect you from making impulsive decisions during market downturns. They are a form of forced investing and help you stay committed to one asset while others start to panic sell. Historically, the crypto market has always operated in cycles of busts and booms.

As such, cryptocurrencies typically catch up to and exceed the price point from which they fell, and you’d be grateful you didn’t give in to fear and sell your assets. Also, you could buy more tokens when the price is low, which will lead to higher profits when the prices recover and start to rise.

However, these benefits can work in your favor only if you do not lose sight of basic concepts such as:

-Stay invested for the long term

-Start with small sums and gradually increase it

-Keep a tab on your performance and adjust the SIP accordingly

Several exchanges in India offer SIP crypto; you can start investing in Bitcoin or Ether with as little as Rs100. You can set the investment frequency to daily, weekly and monthly. Experts even suggest allocating 80 to 90 percent of your crypto investment budget to SIPs.

However, choosing the right tokens for your SIP is also essential. Tokens that are backed by strong fundamentals and offer many use cases are bound to do well in the long run. Large-cap tokens like Bitcoin and Ether are also a great option – they are comparatively less volatile and backed by large-scale investors.

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