May has been a pressure-filled month for cryptocurrency investors. The world’s biggest cryptocurrency Bitcoin came to an nearly 4-month low last month. Earlier Bitcoin had plunged more than 50 per cent to $30,066 from its record higher of $64,895 hit on April 14. The coin linked to the Ethereum blockchain network, Ethereum, dropped practically 57 per cent to $1,850, its lowest level given that late January.
There have been usually a lot of uncertainties in this class of assets. However, this has not deterred Indians from investing in this asset and today India has more than 10 million cryptocurrency investors as of April 2021. With crypto rates not too long ago seeing a substantial pullback, the Reserve Bank of India also clarified on 31st May 2021 that bankers can not cite the Supreme Court order of 2018 to warn customers for trading in cryptocurrency, as RBI has not issued any guidance given that 2018.
S Ravi, Managing Partner, Ravi Rajan & Co. and former Chairman of Bombay Stock Exchange, says, “Speculative trading is not the right form of investment, as regulators have still not come out with clear guidelines, which would decide the fate of cryptocurrency.”
With Elon Musk‘s tweet, the decline in the cryptocurrency world started, where he stated that Tesla will not accept Bitcoin as payments anymore. Musk stated that Tesla will no longer allow vehicle purchases using Bitcoin due to environmental concerns. Additionally, China’s announcement on banning economic institutions and payment businesses from giving services associated to cryptocurrency transactions also aggravated the fall in the industry.
Buy or Sell – What ought to you do?
While due to the current industry fall and uncertainties investors are opting for sell-offs which is certainly painful, on the other hand, more than the last year, Ethereum’s (ETH) cost climbed 1,150 per cent even though Dogecoin’s 13,310 per cent in the identical stretch.
Industry authorities say, as an asset class cryptocurrency is right here to remain and the outlook is positive. Ravi says, “We all know cryptocurrency is highly volatile and investors should be watchful. It is important to hold on to these investments for at least the medium term.”
He additional adds, “Investors are advised to invest a smaller percentage and this should also be a part of the basket of investments. Systematic investment based on the investor’s ability would give returns over a period of time. But all investors need to remember that logical thinking and understanding of the technology driving cryptocurrency will be of utmost importance.”
Although cryptocurrency is not illegal in India, it nevertheless is not regulated – which in turns has designed a lot of confusion, as there is no governing body to regulate it and the possibility of frauds and scams becomes rampant. That is why authorities say it is crucial to have a thorough know-how of the tech behind this asset to make more informed choices. Also, the infrastructure supporting cryptocurrency is nascent as the exchange platforms handling these currencies frequently have technical mishaps.