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The digital dollar idea from Biden is a good thing for Indian cryptocurrency investors

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Within a month of the announcement of India's Union Budget 2022 about the arrival of a digital rupee, US President Joe Biden signed an executive order establishing a national policy for digital assets and a digital dollar.

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A US executive order signed by President Joe Biden on March 9 directed government agencies to review the risks and potential benefits of digital assets, including cryptocurrencies, and to also calculate the risks and benefits associated with establishing a central bank digital currency, such as a digital version of the US dollar.

Consumer protection, financial stability, illicit finance, the competitive advantage of the US economy, financial inclusion, and responsible innovation are the six major themes addressed in the initiatives.

Additionally, the US Treasury, Federal Reserve, Securities and Exchange Commission, Consumer Financial Protection Bureau, and banking regulators were asked to prepare reports on the broader implications of digital assets, including the effects on consumers, investors, businesses, and economic growth. The purpose of this Executive Order (EO) is to promote innovation around digital assets responsibly.

Know the difference between a digital currency and a cryptocurrency

Many people mistakenly assume that a digital currency, such as CBDC, that governments across the globe are discussing is the same thing as a cryptocurrency.

That is not true. A digital currency can only have features that are similar to actual currency, so the Indian digital currency is a digital rupee, and the same applies to the dollar, which can be viewed digitally. It can be used to purchase goods and services.

There is no legal tender status for your crypto assets nor for your cryptocurrencies. It means they can't be used to buy or sell things. It's the same as buying gold or other investment products.

As a crypto investor, what do you do? Never underestimate the value of asset allocation

The importance of asset allocation and diversification cannot be understated. Asset allocation is a critical aspect of building wealth; no matter how simple it may seem, it is the only way to build wealth; before investing in crypto, you should understand the technology behind it, the underlying risk, and the various problems the project is trying to solve on the block chain

  • Love or hate crypto, but don't ignore it

Regardless of what you think, don't ignore it. Even if you disapprove of certain technological advances, in my opinion, you should embrace them rather than ignore them. Remember that the stock market was once treated like a gamble and is now a mainstream investment avenue.

  • The 5 percent rule should be followed

In essence, 5 percent means you should only invest what you can afford to lose, because crypto is still a new creature in the jungle, and you should proceed with caution due to its high volatility and risk potential. So, unless you know your risk profile and are well-versed in this field, don't invest more than 2 to 5 percent.

  • Create your own crypto index

Like the stock market, the crypto market also has blue chips, mid caps, small caps, and penny coins. Start by investing in coins like Bitcoin or Ethereum that are blue-chips.

Also, Read - The best way to maximize cryptocurrency earnings through smart trading

Cryptocurrency remains one of the most volatile asset classes, including a high price swing, a low price swing, and a very wide range of price swings. Because of this, new investors typically try to time the market, especially if they have made a few successful trades in the past.

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