By Vikram Subburaj
Dhanteras is widely celebrated in India as an auspicious occasion to embark on new beginnings, particularly related to wealth and prosperity. Traditionally, this day has been synonymous with the purchase of gold and other precious metals, as they symbolise future financial security and success. However, with the evolution of the financial landscape and the rise of digital assets, we believe it is time to consider an additional route of wealth preservation and generation this Dhanteras — Bitcoin.
A Modern Digital Investment
As the global economy continues to recover from its macroeconomic challenges, the crypto market has emerged as an increasingly attractive option for investors seeking considerable returns. Given the positive narrative leading into 2024 (Bitcoin halving, spot ETF etc.), now is an opportune moment to explore the possibilities that the world of digital currencies has to offer.
Bitcoin, the standout performer of 2023 with a year-to-date return of 110 per cent, has been making waves with its impressive upward swing. Globally, both retail and institutional investors are increasingly drawn to Bitcoin, recognising its potential to serve as a valuable investment for portfolio diversification. While gold has traditionally been seen as a safe haven investment, Bitcoin’s growing prominence is challenging this narrative, offering investors an alternative avenue for wealth preservation and appreciation.
In addition to its potential for good returns, the allure of crypto assets as a hedge against inflation cannot be overlooked. The decentralised nature of crypto assets provides a safeguard against the devaluation of fiat currencies. The finite supply mechanisms embedded in certain assets such as Bitcoin serve as a countermeasure to the inflationary pressures often witnessed in traditional financial markets.
Given the above, global investors view crypto as a strategic tool for mitigating the adverse effects of inflation, thereby solidifying their position as an essential component of a diversified investment portfolio.
Crypto’s Place In An Ideal Portfolio
Every portfolio comes with its risk-reward ratio. The inclusion of crypto assets into a portfolio drastically improves the reward while adding some element of risk. This is particularly valid for a minor share (2-5 per cent share of crypto assets in a portfolio). Within this share, ideally, Bitcoin and Ethereum (the top two crypto assets by market cap) should form the majority of the investments.
Ensuring Safety Amidst Potential
Embracing the world of crypto, however, demands a cautious approach. While investing in crypto has the potential to yield significant returns to those with a long-term horizon, there are risks that an investor needs to be aware of. These risks can be classified as – transactional, storage-based and volatility-based. Transactional and storage-based risks can be obviated by using a credible Indian crypto platform which can also aid an investor in terms of regulatory compliance while extending support to day-to-day operations on the platform. Inherent volatility in the crypto asset class can be addressed by using a long-term approach to investing.
Investing in crypto also requires an effort to monitor the sector – a comprehensive understanding of market trends, regulatory developments, and technological advancements is crucial to navigating the crypto space effectively.
Just as one exercises caution during Diwali festivities, ensuring safety while indulging in firecrackers or lighting lamps, it is equally important to exercise prudence and diligence to mitigate risks and ensure a secure investment journey.
So, this Dhanteras, if you consider venturing into the world of crypto, start slow and give yourself time to understand and appreciate the nuances of the market. With the right approach and a growing understanding of crypto, this Dhanteras could mark the beginning of a promising and rewarding investment journey.
(The author is the CEO of Giottus crypto platform)
Disclaimer: The opinions, beliefs, and views expressed by the various authors and forum participants on this website are personal and do not reflect the opinions, beliefs, and views of ABP Network Pvt. Ltd. Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Cryptocurrency is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Cryptocurrency market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.
