But is it really an dependable investment instrument? Though the crypto coins give high rate of returns, but at the same time it is equally volatile and susceptible to frequent market crashes.
So how do you decide whether you should invest in these virtual coins. If you go by the advice of one of World's richest man Elon Musk , crypto could become the future currency of the world. He himself owns Bitcoin, Ethereum and Dagecoin. Musk statement led to a sharp rally in cryptocurrencies in September this year, so much so, that Bitcoin touched an all-time high at $65,000 mark.
This investment avenue is currently the burning topic of discussion across the world. More it rally's, the more it leaves keen investors in confusion. They are still struggling to understand the intricacies of the cryptocurrencies.
It rallied to a record, topping $66,000 for the first time in September in the wake of the successful launch of the inaugural exchange-traded fund for U.S. investors. The ride was volatile: The token plunged below $30,000 in June amid criticism of its energy consumption and China's cryptocurrency crackdown. It then began to recover in part as the crypto sector adjusted to China's broadsides.
Historically, this volatile digital currency in recent days hovered in a narrow range as it approached its previous April high. The price added more than a thousand dollars in a minute just after the open of stock exchanges in the U.S.
Demand for the ProShares Bitcoin Strategy ETF continued to surge, with more than 29 million shares changing hands Wednesday, or more than during the fund's almost record-breaking debut. That's equal to more than $1.2 billion in volume. The first Bitcoin-linked exchange-traded fund listed in the U.S. launched on Tuesday as the second-most heavily traded fund on record.
However, many quarters of the Wall Street have a deep skepticism about Bitcoin's role in finance. Securities regulators are stepping up their scrutiny of cryptocurrency, with the U.S. government effectively blocking a Bitcoin lending program at Coinbase Global Inc. Critics have also cast doubt on claims the asset's scarcity makes it a long-term store of value and note its slow uptake as a unit of exchange.
Bitcoin rose as high as $66,976 during New York trading hours, bringing its gain for the year to almost 130%. The largest digital currency by market value gained more than 300% last year and 95% in 2019 after tumbling 73% the previous year.
With turnover of almost $1 billion, the ProShares fund debut Tuesday was behind only a BlackRock carbon fund for a first day of trading, the latter ranking higher due to pre-seed investments, according to Athanasios Psarofagis at Bloomberg Intelligence.
“Clearly, the launch of a Bitcoin futures ETF in the U.S. has sent prices soaring to these levels.
Please remember cryptocurrency is not a legal tender in India and most parts of the world as of now. The coins in circulation are predominantly privately created and there is a lack of clear understanding of the disruption these coins may cause. So, the Reserve Bank Of India (RBI) has said it is planning its own crypto coin and may launch it in a phased manner.
However, investing in cryptocurrency is not illegal in our country and many online exchanges are operating in the country – like CoinDCX and WazirX – that can be used for trading and investment in cryptocurrencies. China, Russia, Vietnam, Bolivia, Columbia, and Ecuador have banned the cryptocurrency.
There is no denying that Crypto coins often give better returns than traditional investment tools. Many people made massive amounts of money when the crypto market was on a bull run during the first four months of this year. Bitcoin gave a return of over 800 per cent during the financial year 2020-21. In April 2020, it was trading around $6,640 but by April this year, it had neared $65,000. Most other coins too witnessed a surge in prices, giving handsome returns to the investors.
In Wall Street, Bank of New York Mellon Corp., Goldman Sachs Group Inc. and Morgan Stanley are among firms offering crypto-related services.
There is a still a long way to go.Just 10% of financial-services firms are investing in Crypto coins but the vast majority are hesitant about its asset class.
Over the past few years, a whole new crypto-economy has formed. Non-fungible tokens or NFTs -- which allow holders of digital art and collectibles to track ownership -- have surged into the limelight.
El Salvador has become the first country in the world to accept Bitcoin as legal tender. Announcing the decision on Tuesday, the government of El Salvador claimed that the move will give many citizens of the country access to bank services for the first time.
The United States, Canada maintains a generally bitcoin-friendly stance while also ensuring the cryptocurrency is not used for money laundering. Bitcoin is viewed as a commodity by the Canada Revenue Agency. Australia considers bitcoin neither money nor a foreign currency, with the Australian Taxation Office (ATO) ruling it an asset for capital gains tax purposes.
On Oct. 22, 2015, the European Court of Justice (ECJ) ruled that buying and selling digital currencies is considered a supply of services and that this is exempt from value-added tax (VAT) in all European Union (EU) member states. Additionally, some individual EU countries have also developed their own bitcoin stances.
The United States has taken a generally positive stance toward bitcoin, though several government agencies work to prevent or reduce bitcoin use for illegal transactions. Prominent businesses like Dish Network (DISH), Microsoft, Subway, and Overstock (OSTK) welcome payment in bitcoin.The digital currency has also made its way to the U.S. derivatives markets—adding to its legitimacy.
Bitcoin was born in 2008 with the publication of a research paper by someone who went by the name Satoshi Nakamoto.
The paper was entitled “Bitcoin: A Peer-to-Peer Electronic Cash System.” Its birth ignited a digital currency revolution that led to the emergence of more than 12,000 other coins, according to CoinMarketCap.com data. The total market value of cryptocurrencies exceeds $2.5 trillion.
So bitcoin is just over 12 years old. However the anonymous nature of bitcoin has challenged many governments on how to allow legal use while preventing criminal transactions. Many countries are still analyzing ways to regulate the cryptocurrency. Overall, bitcoin still remains in a legal gray area for much of the world.
(Chander Sharma)
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