With the recent cryptocurrency market correction, investors in India have taken a breather from stacking their portfolios. However, in the long term, they remain bullish on the top two cryptos, Bitcoin and Ethereum.
After Terra’s debacle that led to LUNA trade at $0 last month, other tokens too corrected heavily. This was in tandem with the plunge in US tech stocks.
The global crypto market cap was down 5.27 percent at $1.24 trillion at the time of writing, CoinMarketCap data showed. The market crash comes from the fear of a global recession.
Moneycontrol spoke to investors who have placed their bets on cryptocurrencies and most of them said they have gone slow on their investments given the bearish cycle but exiting the crypto market altogether is not on the cards.
What are investors up to?
Hitesh Malviya, the founder of venture capital firm IBC Capital, said his investments have slowed down because of various economic factors, one being reports of a looming global recession, adding that he has planned investments and not everything is in cryptos.
While some are cutting down on crypto investments at this time, others are shifting their focus to other digital assets, ultimately remaining in the Web3 space.
Raj Kapoor, the founder of India Blockchain Alliance, said that he changed tracks immediately after the crash and dived into staking and yield farming, calling them the “best hedge against crypto assets”.
Just as investors in the Web2 space earn interest on their saving bank deposits, staking and farming are the ways to earn interest in the De Fi or decentralised finance space, except for the interest rates on offer. While interest rates offered by banks on savings accounts can range anywhere between 3.5 percent and 7 percent, the returns in the crypto segment are generally much higher.
Others are taking a different path. Sunny Assoldekar, estimation engineer, Drydocks World Dubai, and an investor himself, put all his investments into stablecoin Tether and now his portfolio is only in stablecoins, he said.
Stablecoins are cryptocurrencies that are pegged to a fiat currency.
On the other hand, investors Keshav Aggarwal, founder of Bitcoin Investor Community, said that given the current market trends and “rigorous” government policies, he has stopped investing at this time and will be back only if the market gives a good return.
BTC, ETH will win, believe investors
Malviya, who is a long-term investor and who witnessed the 2018-2020 bear cycle as well, has his bets on the top two cryptocurrencies, Bitcoin and Ethereum.
“I have my personal belief in Bitcoin and Ethereum because I believe these two cryptocurrencies have a very bright future. Other cryptos will also make their way but right now they are in their innovation phase,” he said, adding that he is more bullish on Ethereum given its use-cases in Web3.
Backing Malviya’s opinion, another investor, Abhirup Sekhri, chief operating officer of Booming Bulls Academy, said, “I have high hopes from ETH (Ethereum) as the release of ETH 2.0 is around the corner and I’ve personally bought ETH in this dip. Apart from ETH, BTC (Bitcoin) is also a classic choice for most investors.”
While Kapoor believes Bitcoin and Ethereum are safer options, he also made a point that there is a need for investors to study the mechanism behind the tokens before arriving at a decision.
“If you ask me for preferences, I would back good projects and their tokens that are actually solving real-world problems. Not meme coins, for sure. There are still plenty of excellent options if you look beyond Bitcoin and Ethereum. All we need is to sit back and understand tokens from a real-world perspective and not fall prey to hearsay,” he said.
Assoldekar, on his part, invests in cryptos with smaller capitalisation but believes that the future of the industry is Bitcoin and Ethereum, considering the stability factor.
Clearly, then, the top two cryptocurrencies Bitcoin and Ethereum are the winners when it comes to popular choice.
Has taxation affected investing?
The Indian government introduced taxation on digital assets in its 2022-23 Union Budget, leading to optimism in the industry that it is on a path to regulation and clarity.
But Finance Minister Nirmala Sitharaman then said the tax doesn’t mean the industry has been legalised, roiling the industry and dampening sentiment. The trading volume at Indian exchanges has been seeing a downward momentum since then.
While investors believe that there is a lack of clarity in the industry from the government’s end, they don’t foresee the government banning cryptocurrencies altogether. Aggarwal believes that the government might not ban cryptos but hefty taxation may lead investors to shift from Indian exchanges to those in other countries.
Malviya said, “Long-term investors don’t need to worry about taxation as 30 percent would not be anything for those who are already paying taxes for digital assets. This would be a challenge for traders in India.”
Dileep Seinberg, founder, MuffinPay, said, “Regulations are always reasonable to promote suitable investments. I won’t be stopping investment or building crypto projects.”
Kapoor, though, believes that the future of crypto is uncertain. With no clear regulatory direction, he said that the investors are in a “state of opaque transit” as trading volumes at the exchanges have also dried up after the tax.
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