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.