Cryptocurrency in Singapore: 7 Things to Know Before You Start Buying

Cryptocurrency in Singapore 7 Things to Know Before You Start Buying

Yesterday (6 Mar 2024), Bitcoin reached an all-time high. And people are going a little crazy. 1 week prior to Bitcoin hitting its all-time high, Coinbase—an online platform for buying, selling, transferring, and storing cryptocurrency—crashed due to overwhelming traffic.

Feeling the FOMO yet? Before you start trying to buy crypto, let’s dive into 7 things you need to know.

1. How volatile is cryptocurrency

In June 2022, the crypto market was crashing. Everyone who invested in almost any form of crypto was seeing their investments evaporate before their eyes. As the contrarian investor that I am, that’s when I bought S$20,000 worth of Ethereum at around S$2,400 per coin. Ethereum kept plunging, and within the same month, I lost almost half of my investment. Imagine staring at a loss of S$9,000.

The crypto market recovered slightly sometime in March 2023, and I closed my position for a S$2,000 loss. Never again.

Today, Ethereum is valued at over S$5,000. Meaning I would have doubled my investment—had I held it. So there you have it. Crypto. Is. Volatile.

Why is cryptocurrency so volatile? It mostly has to do with:

  1. Lack of regulatory framework to accommodate its growth
  2. Lack of a physical form to ground its value
  3. Lack of market share compared to established goods such as gold or cash

Therefore, any sort of news, announcements, or publicity related to any of these above-mentioned factors has a large influence on a cryptocurrency’s value.

Why is cryptocurrency so volatile

2. How much money do you need to buy crypto?

If 1 BTC is currently going for about ~S$88,800, does that mean you need to fork out S$88,800 to buy it?

Nope. You can buy fractions of cryptocurrencies—even if it’s, say, S$50 or S$100.

ETH, or Ethereum, currently goes for around S$5,000, and its value is quickly increasing. This is due to Ethereum’s efficiency, scalability, and applicability as a programming language (that’s why I bought it back then).

If you’d like to get in on ETH, you don’t need a large sum of money. You can put in a small amount—whatever you’re comfortable risking.

Small capital to start investing in cryptocurrency

3. Which are the top cryptocurrencies out there?

Here are 10 of the biggest cryptocurrencies by market cap on 7 Mar 2024, according to CoinMarketCap. Market cap refers to the market value of the crypto in total—i.e. how much money people have already put in it.

Cryptocurrency Price Market Cap Circulating Supply Supply Cap
Bitcoin (BTC) ~US$66,272 US$1.3 trillion 19.6 million 21 million
Ethereum (ETH) ~US$3,790 US$454 billion 120 million 18 million annually, maximum amount uncapped
Tether (USDT) ~US$1 US$100 billion 100 billion Uncapped
Binance Coin (BNB) ~US$427 US$64 billion 149.5 million 170.5 million
Solana (SOL) ~US$139 US$61 billion 443 million Uncapped
Ripple (XRP) ~US$0.62 US$34 billion 54.5 billion 100 billion
USD Coin (USDC) ~US$0.99 US$29 billion US$29 billion ~29 billion
Cardano (ADA) ~US$0.74 US$26 billion 35.5 billion 45 billion
Dogecoin (DOGE) ~US$0.15 US$22 billion 143 billion Uncapped
Shiba Inu (SHIB) ~US$0.00003 US$18.4 billion 589 trillion 1 quadrillion

Do note that these values represent a snapshot in time, and that a cryptocurrency’s price, market cap and supply can wildly fluctuate due to its volatility.

It’s important to note that, apart from market cap, the value of a cryptocurrency also depends on its circulating supply and supply cap

Every cryptocurrency has a cap on how much cryptocurrency can be produced (mined). The smaller the gap between the supply and its cap, the scarcer it is. This drives prices up.

factors affecting value of cryptocurrency-market cap-circulating supply-supply cap

4. Where can you buy cryptocurrency in Singapore?

Unless you’re part of a mining farm, or have set up your own mining rig (hello, computer graphics cards global shortage) — you will most likely get your cryptocurrency through a crypto exchange platform

A thing to note is that most of these exchange platforms transact in limited currencies. Not all accept SGD.

Most of the time, you can easily buy BTC or ETH (the two biggest cryptos) in Singapore dollars. But many of the smaller cryptocurrencies (or altcoins) only accept transactions made in USD or BTC.

Some of the best cryptocurrency exchanges in Singapore are Coinbase, Gemini, Kraken and others. Check out our list of crypto exchanges in Singapore, their trading fees, as well as their buying fees.

Finally, it’s best to fund your crypto purchases using good old bank transfers. Paying by debit or credit card will incur additional fees of up to 3.99%. Not worth it.

5. Hot vs cold wallet — how should you store your cryptocurrency?

There are two ways to store your cryptocurrency: in a hot wallet or a cold wallet.

Most crypto exchanges offer a hot wallet, i.e. a crypto wallet that’s connected to the internet. With a hot wallet, your cryptocurrencies can remain liquid, so as to facilitate easy trading and withdrawal.

The downside to having a hot wallet is that it’s vulnerable to cyber attacks and hacking, which is why a cold wallet could be a good option.

A cold wallet is a crypto wallet that is NOT connected to the internet.

There are different types of wallets, such as a USB flash drive, your desktop computer (that’s not connected to the internet, obviously) or even a corrosion-resistant steel card. These devices will store your private keys, seed phrases, wallet address and other information unique to your cryptocurrency.

It’s recommended for storing large amounts of cryptocurrencies, but it does make it a lot more difficult to trade it. Most crypto exchanges charge a withdrawal fee if you choose to draw your funds to store it in a cold wallet.

cryptocurrency-hot wallet-cold wallet

6. What else should you research before buying crypto?

The abovementioned points are just tips to get started on the act of buying cryptocurrencies, but now comes the thinking part—how do you decide on which crypto to buy?

Before buying any crypto at all, we recommend learning at least the basics. Coinbase has a great resource of guides you can explore.

Once you understand what cryptocurrency is and generally how blockchain works, you can make an informed decision about whether to invest. Read up on the latest crypto news and, most importantly, follow Elon Must on X—one tweet from him saying “Doges ftw” caused the coin to jump 4% in a few minutes.

Lastly, read up on risk management and investment psychology. With the volatility of crypto, you’re going to need it.

7. How much should you invest in cryptocurrency?

Cryptocurrencies as a whole, and consequently, blockchain technology, is still in a period of rapid growth.

This means that volatility is a given, and as such, should be approached with caution and knowledge. That volatility can deliver amazing returns, yet also result in prices plummeting with just a tweet.

In Singapore, the crypto market is still fairly unregulated compared to, say, stocks or insurance. There are precious few safeguards for the retail investor.

In fact, this is what Senior Minister Tharman Shanmugaratnam said about crypto in Parliament:

“Cryptocurrencies can be highly volatile, as their value is typically not related to any economic fundamentals. They are hence highly risky as investment products, and certainly not suitable for retail investors.”

So if you’re looking to start buying crypto, we recommend starting with an amount you can afford to lose. You can start by buying bits of crypto with just S$50 or S$100. Don’t put in S$20K like me.

Meanwhile, most of your other investments should be tied to physical, real-world objects, such as real estate or stocks. In fact, we have an easy guide on how to start investing with S$1,000 in Singapore, as well as tons of other, more advanced guides to get ahead.

Do you know someone who’s considering investing in cryptocurrencies? Share this article with them!