Bitcoin rally turning many naysayers into belivers
MUMBAI: Forget equities, you have a new asset class to drive even the diehard investors breathless: bitcoin, or digital gold.
The cryptocurrency has startled many nay-sayers in India with its more than two-fold jump in prices since September as investors are not selling their holdings, expecting further upside in the market, known for its wild swings.
“Bitcoins are here to stay and will keep on steadily gaining value in the coming years,” said Madhur Todi, MD, Mera Money Advisors, (a bitcoin investor and a professional wealth manager). “I am staying put with my 2015 investments into bitcoins and planning to buy more at these levels. I have never thought of booking profits any time soon.”
“This is a speculative asset class, and patience is the name of the game,” he said.
In India bitcoin prices have touched as high as Rs 8,60,000 per bitcoin while globally it surged to $11,000, a record high. Back home, it pared some of its gains to trade at round Rs 8.27 lakh per unit. High volatility remains a key feature of this market, making the price forecast a difficult job.
“With the latest rally in bitcoin market, a new breed of wealthy investors are entering into the space in India,” said Sandeep Goenka, co-founder of Zebpay, a bitcoin exchange. “People who were earlier averse to the bitcoin market are now showing interest amid global acceptance about the market. The latest rally is seen as just a beginning.”
Zabpay is now experiencing about 10 lakh transactions on its apps in a month, which is about nine-times higher than the number a year ago.
Even institutions and hedge funds too are now looking at the bitcoin as an asset class. Global accounting firm PricewaterhouseCoopers has accepted a payment in bitcoin for its advisory services, its first in a virtual currency.
But bitcoins are yet to be regulated in India leaving a potential fear-factor among investors. A few weeks ago, the Supreme Court asked the government to respond to calls to regulate the bitcoin market.
Also, an investor needs to have adequate knowledge about the market before s/he jumps into it.
“New investors should understand the technology first before investing in bitcoins. There are many risks attached to it,” said Sahil Shah, a third-year BBA student at Nirma University in Ahmedabad and a bitcoin investor. “Looking at global demand and development, bitcoin prices could conveniently reach $20000 in 6 months.”
There are a lot of international factors that influence the price movements of bitcoins and cryptocurrencies. Chicago Mercantile Exchange and New York-based Nasdaq now intend to launch bitcoin futures.
On the demand side, the introduction of futures and ETFs suggest some big players are going to work to increase demand, BNP Paribas said in a report.
“It’s difficult to say if it’s a bubble or not because the entire ecosystem of cryptocurrencies is new and everyone is experiencing them for the first time,” said Todi.
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Via:: Economic Times – Stocks