The crypto market is abuzz with anticipation of a bull run. The positive industry sentiment is fueled by key developments such as SEC approval on Bitcoin ETFs and the upcoming Bitcoin Halving. This positive momentum is foreseen to extend beyond Bitcoin and also promises increased participation from large institutional investors, injecting smart capital into this burgeoning asset class.

A recent Chainalysis report states India having the highest adoption rate in crypto and with the current market sentiment, an influx of new investors is expected and the choice of a right exchange becomes paramount.

The Gateway: Crypto Exchanges as entry points

Crypto exchanges are the gateway to investing in Virtual Digital Assets (VDAs) These exchanges, similar to trading platforms for stocks, provide access to a spectrum of crypto assets, employing sophisticated systems for secure transactions. Leading exchanges leverage complex database architectures, enhancing security, transparency, and liquidity.

Emphasizing on compliance is crucial for consumers choosing a crypto exchange. FIU-IND registration confirms the exchange’s commitment to PMLA guidelines. Recent actions by the Indian government blocking non-compliant offshore exchanges underscore the importance of FIU compliance. Users should choose only compliant exchanges to safeguard their assets, as non-compliance could lead to asset blockages.

Opting for exchanges with robust Know Your Customer (KYC) procedures ensures stringent identity verification, preventing illicit activities. This commitment not only safeguards consumers but also fosters a secure and regulated crypto exchange environment. When selecting the right crypto exchange, it’s crucial to look for platforms that offer a quick and hassle free on-and-off-ramp solution for converting INR to crypto and vice versa. This streamlined process enhances user experience, providing easy access to the crypto market.Users must remain vigilant against fake domains. For every popular exchange, there are hundreds of fake exchanges often trying to exploit new users.

Liquidity: The critical factor to consider while choosing an exchange

When choosing an exchange for trading or investment, users must prioritize liquidity, a crucial factor in financial markets that determines the ease and speed of buying or selling assets. Efficient liquidity ensures swift execution of buy orders at prices closely aligned with those displayed on the screen, fostering smooth trading with minimal price slippage. This attribute is pivotal for market stability, effective trading, and bolstering the credibility and value of emerging crypto assets.To assess liquidity, a quick glance at an exchange’s trading volume provides valuable insights – the higher the volume, the better the liquidity. The diversity of trading pairs offered on an exchange is a factor influencing liquidity. Well-established and widely traded pairs generally boast better liquidity.

To facilitate liquidity, exchanges often work with market makers, liquidity providers on the order books of the exchange. The market makers provide the best spreads for the markets, enabling users to buy and sell at the most optimum price on the exchange. Additionally, they provide depth to the order book, allowing an investor trying to buy a large sum of a crypto asset to get the best possible execution price on the platform. For large-scale investors, institutions, and enterprises, exchanges often facilitate an OTC desk to enable these smooth transactions.

Platforms with well-established track records of at least five years inspire confidence, and transparency is further enhanced when exchanges regularly publish Proof of Reserves (PoR), validating their claim to hold users’ assets securely.

Investors should check the exchange’s website to understand the parameters for listing tokens. Reputable exchanges often employ stringent methods to protect retail investors. This includes providing comprehensive information about the token-listing process that projects must undergo to become eligible for buying and selling. Investors are also educated about the risks, characteristics, technicalities, and fundamentals associated with a crypto project. This approach enhances investor protection, maintains fair and transparent markets, and reduces systemic risk by offering ample diversification opportunities.

Exchanges actively listen to customer feedback to enhance the platform’s usability

Exchanges actively engage with customers through various channels like Telegram, Discord, and other community forums. To understand more about the asset class, investors must consider joining the exchange’s community channels. Established exchanges have dedicated support teams that regularly collect and analyze users’ inputs allowing exchanges to identify pain points, address issues promptly, and implement enhancements.

Continuous iteration based on customer feedback is key to ensuring a user-friendly experience, fostering customer satisfaction, and staying responsive to evolving user needs in the dynamic crypto market. Customers should look out for exchanges that have started to leverage AI tools to actively engage with users. The introduction of faster and synchronous channels, such as live agent chat, has significantly improved response times, managing heavy user queries with a 40% reduction in response times and a 30% increase in satisfaction scores.

Conclusion: A Roadmap for informed crypto engagement

Crypto is an emerging asset class, and therefore, investors must conduct their own research before making investments. Investors should allocate their funds to assets based on their risk appetite. It is advisable for investors to diversify their portfolios among various crypto assets. The process of diversification depends solely on the risk appetite of the investor. Investors must look for exchanges that offer a variety of investment products. These products are especially helpful for investors with a low risk appetite, having a systematic and disciplined plan in place can help mitigate the effects of market volatility.

(The author Mridul Gupta is COO, CoinDCX)

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