Cryptos are at all time highs and very volatile. At this juncture, if anyone owns a piece of the action, should one HODL (hold on for dear life)?
Absolutely. It is not like an old time jump. It has been happening since 2020 now and the markets have been growing and Bitcoin at least has been growing slowly and steadily and holding its ground. I would say it is a great time to be in this ecosystem. The market has just hit $3 trillion globally. When it was $1 billion, people thought it was overheated and now it is at $3 trillion! Overall, it is a very interesting time for crypto right now.
Are we going to see Bitcoin at $70,000 or $100,000? Where do you see it?
I do want to speculate but the general consensus is $70,000 is the next barrier to cross and the talk of the town is that once it crosses this barrier, it is probably going to zoom to that 100K mark. In general, the whole mentality right now is that $100,000 is a significant milestone for Bitcoin. That is an insight which only time will tell, but looking at all the news happening around globally as well as locally in India, crypto is in a strong position right now and we have to wait and watch.
Earlier this week, we had seen the cryptos touching all time high and they have been in selloff mode. The volatility is usually quite sharp in cryptos. How should one ride through it?
When one thinks about crypto investment, there are theories out there. One is a short-term view on it and the problem with crypto markets in general is that because it is a new market, one sees wild short-term fluctuations. The biggest reason being that the market itself does not know how to value this asset. There is so much confusion and the regulations are not clear. Countries around the world are still deciding and that is the reason for this volatility.
When El Salvador says it is going to be a legal tender it excites the market and suddenly we have China saying they do not want to support this asset class, then the markets go in the negative direction. So, short term, one has to be very cautious and not try to time it in the short term. But in the long term, if you look at the history of Bitcoin, anyone who has held Bitcoin for a three year period has never lost money. From a long-term perspective, a five-year timeline is steadier but in the short term, because of the new markets, these fluctuations are bound to happen and we will continue to see them.
Would you say the meme coins are a no go?
That is probably one of the biggest mysteries. Meme coins, especially Dogecoins, started as a joke currency and even the creator of Dogecoin said this is just for fun. I do not think anyone expected it to get that level of exposure and the kind of adoption that we have seen. Today it has become more of a serious asset where people think that it might become the default currency for social media participants to pay each other or gift each other.
Again this is a completely community driven thing and we have to see where this massive experiment is going and what happens when millions of people get access to an asset which is so easy to access — just the mobile phone and internet — and that is the reason why you are seeing this rise. Millions of people who got it cheap or very easily from friends are pushing this whole market upwards. How long will it last and if this is the right approach is very hard to say right now.
Even six months ago, investing in any of these meme tokens probably was not the best move. But there have been recent reports that someone bought a ship token worth $300,000 or something last year and that is worth a billion and a half! When you see stats like, the market players just want to try their hand at meme coins. But yes, right now it is the most speculative of all the speculation that can happen. The meme tokens are probably the most speculative bets right now.
What do all of your stakeholders make of the government stance? How are all of you looking at this Monday meeting called by the Parliamentary Standing Committee led by Mr Jayant Sinha with crypto stakeholders?
I see this as the initiation of dialogue between the industry which is much needed. In the last few years of crypto in India, we have not really had an industry participation and this seems like a really good direction, where industry is being invited to discuss and this is going to help the government understand about this ecosystem a lot better. It is overall definitely a very good move. This is happening in other countries around the world. Every country is starting these discussions with the industry because one needs to understand what are the ground level realities in crypto, what are the stats saying, what is the data showing you and this interaction that is probably that one good step that we have taken.
The government has not been taking a hardened stand. It has been taking a cautious approach to regulation and crypto in general and that is the right approach here. Anything hastily decided about crypto will probably backfire because every country is now trying to understand what is the right regulation and India is on that path trying to understand what the right approach should be. It is a good move overall.
The RBI Governor has publicly said 24 hours ago that he is still very concerned by what cryptos can mean for financial stability? With the Reserve Bank of India taking such a hard stance, whatever might be happening in New Delhi, we should also point out that anybody who is looking at cryptos is doing so at their own risk. We do not know which way it is going to go?
Yes, absolutely see crypto is unregulated and right now the regulators, the government, everyone is trying to see what is the right approach. There are always going to be the pros and cons and it is never a surprise to see the bad side of crypto being discussed as well as the good part of it. The key challenge that we have as a nation is how do we bring in the right regulations to first and most importantly protect the investors.
The second thing is to ensure that innovation thrives in this ecosystem and we as a nation can take advantage of this innovation because in the last five-10 years of India’s progress, technology has played a big part and cryptos signifies that evolution of the whole financial domain on the internet. It is never bad to call out the wrong that is happening in the ecosystem. In fact, we should encourage the debate so that we eventually bring up the right regulations. If we think only in terms of positive or negative, we are going to have a lopsided regulation which is going to hurt the industry. I wholeheartedly welcome all the criticism as well as the good things because that is how we will build the right regulation in India.