The year that just passed by witnessed the rise in popularity and volumes in cryptocurrencies, particularly Bitcoin.
The currency peaked out at a whopping USD 19,000 in December from about USD 1,000 recorded in January.
The rise drew the attention of media, investors, cryptocurrency traders as well as various regulatory bodies globally and in India.
At the same time, traditional asset classes, barring equities gave subdued returns as compared to the former. Gold, largely seen as a defensive bet in a weak market environment, had given around 4 percent returns, while Sensex and Nifty gave around 28-29 percent.
So, is there a chance of introducing Bitcoin in your portfolio, either as a replacement to gold or as an independent asset itself?
No regulatory oversight:
As such, the valuation and regulatory framework of the currency is an issue. Considering the volatile nature of Bitcoin, experts point that it may not be prudent for a retail, small-time investor.
Clarity on functioning:
Meanwhile, Kotak Mutual Fund’s Lakshmi Iyer said that they had been receiving several queries on Bitcoin. “Whether a student or a senior citizen or any other aspiring investor wants to know and/ or invest in bitcoin. (It is) very difficult to recommend such assets without adequate understanding of how this asset operates, its demand and supply patterns, ownership etc.,” Iyer, CIO (Debt) & Head of Products at Kotak Mutual Fund said.
A bad ending?
Not just these experts, but big international names too believe that the currency may not be the best form of investment.
“In terms of cryptocurrencies, generally, I can say with almost certainty that they will come to a bad ending,” Warren Buffett, chairman & CEO of Berkshire Hathaway told CNBC last week.
While gold may not have given the best reason compared to other asset classes, experts believe that it still continues to be a healthy defensive. This, especially in cases when the market could be volatile this year.
Gold prices have jumped by Rs 100 to trade at a seven-week high of Rs 30,750 per 10 grams at the bullion market today amid a firm trend overseas and local buying push. Globally, gold rose 1.17 per cent to USD 1,337.40 an ounce and silver spurted 1.44 pr cent to USD 17.21 an ounce in New York in yesterday’s trade.