BTC in March 2020, almost every market crashed when the world went into lockdown due to the coronavirus pandemic. Even cryptocurrencies weren’t spared the panic. However, the cryptocurrency market has been one of the first to bounce right back and how! If one had invested Rs 3.7 lakh ($4,945) at that time to buy just one Bitcoin (BTC), as of 4 January this year that one BTC would have been worth nearly Rs 26 lakh – an almost 7x return in nine months.
Cryptocurrencies like Ethereum, XRP, Neo and others have been following a similar trend to BTC, albeit at a much lower value. These lower-value cryptocurrencies are also enticing investors to get in hoping to cash in on the quick returns.
Naik predicts that once BTC gets past $35,000, even $50,000 would come in fast because of a retail investor frenzy. However, it could also all go down equally fast. He says, “I wasn’t expecting BTC to break $20k so easily. I was expecting it to drop, but surprisingly it hasn’t.” That has got him watching the charts very closely, buying on dips and selling on highs. “I’m losing sleep over this because cryptocurrency is a 24×7 market.
High risk, high returns
BTC investments are high risk, he places the risk potential at par with the stock market. He says, “Equities are subject to risks of a company going bankrupt or getting affected by takeovers, policy decisions, or even fake news for example. Bitcoin can also be affected similarly.” The volatility in BTC is very high. It can swing 5-7 per cent within minutes, dropping even by 15 per cent or gaining that much in intra-day trade. But lately, prices have been stabilising quickly. Naik attributes this to large-scale buying by institutional investors, who aren’t selling in the short term.
Legal or not Legal
In April 2018, the Reserve Bank of India had issued a circular barring entities regulated by it (read all banks and financial institutions) from trading in cryptocurrencies. This meant that it became difficult for investors to wire money to cryptocurrencies through banks and hence many opted for a peer-to-peer system.
in March 2020, the Supreme Court overturned the RBI circular making it easier for investors to transfer money to cryptocurrency exchanges or wallets from their bank accounts, bringing on board many more retail investors. And that has fueled this frenzy so far
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