Bitcoin has surged about 20% this week, breaching $22,000 for the first time to reach its all time high of $22,158.40. The largest cryptocurrency in the world has soared by over 13% in the last 24 hours. Year to date, the bitcoin is up by 204%. Why this surge? These kind of returns can attract any investor to invest in bitcoins. Should you invest? Which is the right way to invest for retail investors?
“Bitcoin breaking above $20,000 is a milestone in a year which saw numerous ups and downs in the global economy. This is mainly due to numerous global renowned investors, institutions putting their weight behind Bitcoin. The earlier skepticism has now been replaced by wide-spread acceptance and acknowledgment of Bitcoin as a strong investment option,” says Sumit Gupta, CEO and co-founder of CoinDCX.
Institutions investing in Bitcoins
Institutional adoption of the cryptocurrency is happening. Not just corporates but financial institutions are selling gold and buying bitcoin, which has built confidence in the minds of the investors.
“Companies like microstrategy and insurer massmutual have both invested $475 million and $100 million respectively in bitcoin. Also, large businesses like Paypal now allow its customers to access crypto. Regulatory concerns are turning favourable in different parts of the world. All these developments have built a lot of confidence in the minds of the investors leading to a price rally,” says Ashish Singhal, CEO and Co-Founder, CoinSwitch Kuber.
“Recently, Massmutual, an insurance giant, made its way into Bitcoin investments. Additionally, Alan Howard, billionaire hedger fund manager, is among the backers of a new institutional-focused investment firm, called One River Asset Management, that’s eyeing an as much as $1 billion allocation to bitcoin,” says Sumit Gupta.
Cryptocurrencies like Bitcoin are the future and will play an integral part in the dynamics of world finance, believe the experts. They expect bitcoins to cross 1 trillion market cap soon.
“There are atleast 20 firms worldwide who own bitcoin on their balance sheet. And Fidelity, blackrock, and others which manager trillions in assets are bullish on bitcoin. With additional institutional adoption we see bitcoin easily to cross the 1 trillion market cap which is currently sub 400 billion. That basically pegs BTC price to 50K USD in the next 12 months,” says Gaurav Dahake, CEO, Bitbns.
Should you invest in Bitcoins?
Evaluate your risk appetite and choose investment options wisely, say investment experts.
“Bitcoin is a very risky investment option and putting a bulk of your investment in Bitcoin is not advisable. Prices of Bitcoin have been extremely volatile. There is not enough data for experts to analyse them, so people are investing with imperfect information and joining the herd of speculators,” says Neeraj Singh, a registered investment advisor.
Some experts say getting into it early would be beneficial for Indians. Experts suggest to invest in a disciplined manner just like SIP or systematic investment plan in mutual funds to reduce the risk of timing the entry in the bitcoins.
“Users should invest wisely through SIPs in bitcoin because bitcoin is fairly volatile. But overall to protect wealth and to ensure the value of their money stays and does not depreciate a bitcoin exposure is a must,” says Gaurav Dahake.
Investment advisors caution investors not to get swayed by the fabulous returns. They say, bitcoins are highly risky and not easy to understand.