At a time when Indian government is considering roll out of its own digital currency and carving out a route for investors to exit their investments in crypto, considering past returns of a huge 800 percent in the financial year gone by on bitcoin, you may be tempted to bet on these highly popular digital tokens.
Further the centre is considering putting a ban on trading in cryptos and for it, they are looking at blocking IP addresses of such platforms.
So, as a matter of fact here are some watch-outs to consider if you too are inclined to invest in cryptos including Bitcoin that showed remarkable gains over the last fiscal year:
1. Sharp rally and huge volatility in the asset class makes it difficult to put forth any trend. Also, being highly volatile these should be opted by only investors with high risk-appetite. Besides, the past return of a huge 800 percent is seen as unsustainable for now.
2. Also, as the current format of trading in such cryptos is designed keeping regulation out of transactions, the price movement on a daily basis becomes unpredictable. Thus lump sum investments in such asset class which lack government support and regulatory framework should be strictly avoided to keep huge losses at bay.
Instead investors can still look at the SIP option in cryptos or bitcoin which is a disciplined investment approach similar to mutual funds.
3. Amid the various, regulations to curb their trading, stakeholders are making representations before the government and are coming up with ways to establish investment credentials for such assets.
4. Even though there remain insights that the bitcoin could scale to levels of $1,00,000 mark in this ongoing fiscal year, nonetheless what can come as a hurdle are the regulatory guidelines and any profit booking. Factors though pushing the crypto higher include its limited supply as well as mainstream acceptance by global financial institutions.