Occasionally, we get questions at PrimeInvestor about investing in cryptocurrencies. Unsurprisingly, these questions arrive at a higher frequency when these currencies are trading higher and making rapid up-moves. As they are doing now. BitCoin is trading at higher than $56,000, more than 700% up in one year. And there is the new DogeCoin which has moved up 30x in just 4 months!
At PrimeInvestor, we don’t cover these instruments from a content perspective, nor do we conduct research in them. Naturally, we do not recommend our customers/subscribers invest in any of them.
Why? For the following reasons:
- They are not regulated in India. The currency is not regulated by RBI (which actively frowns on them), and trading/investing in them is not regulated by SEBI. As such, these activities are to be done entirely at the risk of the investor, without any regulatory cover or oversight. We don’t cover such investment products.
- They are purely speculative – there is no tangible underlying asset – either a commodity or a business with cash flows – that drive the value of these instruments. They are purely driven by scarcity of a digital creation, and by supply and demand in the market.
- There is nothing to research – Reams and reams of documents have been written about cryptocurrencies, especially BitCoin, but most of them are about global central banks, inflation, and other economic indicators – signals that are used to predict (read: speculate) on the prices of these currencies. And their prices move due to things like a tweet from Elon Musk. These are not things that can be analysed or researched.
Just like the GME story from earlier this year (and ongoing), they are tempting, captivating narratives. But there is little in them beyond material for pleasant daydreams. When you wake up from these dreams, rest assured that PrimeInvestor will be there to guide you along a safer, steadier path to financial security and freedom.
6 thoughts on “Investing in Cryptocurrencies”
Please look into stablecoins like USDC, which are pegged to the US Dollar. Not all crypto currencies are unstable or speculative.
Agree to your point about stablecoins. Fair observation.
Great !
So you finally come close to touching the untouchable for saying that you won’t touch it 🙂
Fair enough !
But I think it is high time for you to touch another untouchable. Since you have finally moved on to advising on Direct Equity from MFs (and of course several other fixed income options) – I think Creator Subscription Smallcases need your attention now. Some of the young and dynamic creators are doing excellent work with their AI, ML and Quant skills and building a track record. They are legal and legitimate – mostly more cost effective than MFs, good downside protection and far better returns.
I hope you plan for introducing your subscribers with reviews on some of these Smallcases.
If possible, please also review Covered Bonds (like Wink Wealth) as they are now available for retail investors at low ticket rates as well.
Regards
I agree with your decision/view to not cover cryptos. Though, a key investment vehicle that I believe most investors miss (especially relevant for HNWIs) are investments in early stage start-ups. Given the growth of start-ups in recent years, there are many exciting opportunities available in start-ups, where ticket size can be as little as 2/3L. I personally feel more HNWI need to focus on this space, not just to create better returns (this can be that top ~1-5% of their portfolio, which will fall in extreme high risk category) but also to increase retail ownership and participation in the start-up ecosystem. Given, how scattered the space is, it surely needs thorough research.
Thats a good Investment Avenue.
Can you share any such platforms available.
Hello!
Please see and study ticker symbols like “GBTC”, “ETHE” “BLOK”-ETF} & “COIN” in US Stock market.
They have been giving phenomenal returns to the investors there. The “COIN” has got listed very recently. Further there are couple of Leveraged Equity ETFs which are also giving very good returns in the long run e.g. (Ticker Symbols) >>TQQQ, TECL, SOXL, RETL, WEBL. However, here in India we do not have something like this.
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