The crazy Bitcoin rally in the recent time has given an adrenaline rush to many investors, market watchers and to people who just wanted to ride in the wave, but putting money in Bitcoin is not an investment but rather a gambling.
Bitcoin has become a mania. Just last week, the Bachchan family got 70 times returns on their investments because an asset of the company they invested in was acquired by another company which provided Blockchain technology empowered solutions. The company’s shares surged not because they were trading in Bitcoin but simply because they had something to do with Blockchain, which people keep confusing with Bitcoin. “It’s crazy… the global euphoria over Blockchain is sweeping the world…no intrinsic value can be attached,” the company’s Venkata Srinivas Meenavalli said.
The crazy Bitcoin rally in the recent time has given an adrenaline rush to many investors, market watchers and to people who just wanted to ride in the wave, but putting money in Bitcoin is not an investment but rather a gambling. First of all, Bitcoin is a private money and nobody controls it. It has no underlying monetary base to support its value and it is totally subject to its demand in the market.
“It’s kind of like ‘Monopoly’ money,” Jim Cramer, former hedge fund manager told CNBC. “I mean honestly, what’s the difference between bitcoin and trying to figure out the Super Bowl? I mean it’s gambling.” Cramer said the cryptocurrency’s velocity is a sign that its surge is “parabolic,” and that could mean the rally won’t last.
Since India has not legitimised Bitcoin, the money you invest in buying a Bitcoin is going to get you a return only until the time there is another buyer who is ready to pay you more for it. Bitcoin is rallying only until the time the demand is high, but experts say, once people would start selling, the value will tank and the Bitcoin bubble will burst to hurt.
“Right now we are looking at a financial bubble that is bigger than the tulip craze and I believe that we are headed for a bitcoin crash that will supersede any financial worries of the 21st century,” Eric Shiffer, a veteran entrepreneur and CEO of Patriarch Equity told Express.co.uk.
In fact, Indian markets regulator SEBI is planning to come down heavily on illicit ‘initial coin offers’ seeking public investments with a “promise of high returns from bitcoins” and other virtual currencies, PTI reported. From the US to China to France to Japan, central banks of all these countries have expressed concern over the rising popularity of Bitcoin with it being a private currency. India’s central bank is opposed to cryptocurrencies given that they can be a channel for money laundering and terrorist financing. Nevertheless, the Reserve Bank of India has a group studying whether digital currencies backed by global central banks can be used as legal tender. Currently, the use of cryptocurrencies is a violation of foreign-exchange rules.