Bitcoin on Tuesday in the global cryptocurrency markets reduced some of the gains after breaking $68,800, or lingering around its all-time high, to trade at roughly $66,700.
Trades on Indian exchanges CoinDCX, WazirX, and BitBNS reached $2.6 million, $3.4 million, and $7.8 million, respectively, in February, recording their highest ever volumes since June 2023, according to statistics provided by cryptocurrency research firm Crebaco.
In November 2021, Bitcoin hit an all-time high of $68,990.
Even today, some experts maintain their belief that cryptocurrency is not a reliable financial option and that one should avoid it. According to news outlet, Mint, here are few reasons why one must avoid investing in this sector.
1. Absence of regulations: Cryptocurrencies are not yet subject to legislation in India. While the RBI oversees banking transactions, Sebi, the regulator of capital markets, controls investments in stocks and derivatives; as of now, there is no regulator for cryptocurrency transactions.
2. Unpredictability: An increase in price is a result of volatility. In the event that it causes a rise, bitcoin may, on the other hand, pare gains concurrently and at the same rate. Between November 2021 and March 2024, bitcoin fluctuated between $68,000 and $28,000 before rising back to $68,000. Bitcoin increased by a staggering 160% just in 2023.
3. Critical viewpoints: The Reserve Bank of India (RBI), the country’s banking authority, has frequently expressed unwarranted criticism of cryptocurrencies like bitcoins.
4. Intrisic parity- “Think of any store of value – they are either currencies, or financial assets or commodities which are tangible and have intrinsic value (works of art like paintings also have historical, aesthetic and scarcity value). We have seen that cryptocurrencies are none of these. Notwithstanding their current valuations, if a threshold number of people decide to opt out, the entire values can easily collapse to nothing,” stated T Rabi Sankar, Deputy Governor at Reserve Bank of India.
P Vasudevan, executive director at RBI further supported the statement and said, “Cryptocurrencies cannot be called currencies as they don’t have any underlying value,” he said during a panel discussion last month.
5. Greater fool concept: Renowned investor Warren Buffett has strong opinions on bitcoins. The Oracle of Omaha famously declared that he would not purchase bitcoins even if they were made available for $25.
6. A plethora of frauds in the past: Do you recall Sam Bankman-Fried’s US cryptocurrency exchange, FTX? After the exchange filed for bankruptcy, Bankman, the American cryptocurrency industry’s poster child, was found guilty on seven counts of fraud, conspiracy, and money laundering. Paradoxically, Sam was named one of Forbes’ 30 under 30 for 2021.A similar scam was reported from Canada, when 1,15,000 consumers’ cryptocurrency holdings worth $119 million vanished and one of the biggest cryptocurrency exchanges, Quardriga, filed for bankruptcy.
7. Excessive taxes without justification: In 2022, Finance Minister Nirmala Sitharmaan imposed a 1 percent TDS and a 30 percent capital gains tax on cryptocurrency transactions, but this was not seen as a positive indication for the industry. Ms. Sitharaman has frequently said that international agreement would be necessary for any rules pertaining to virtual digital currencies.
