Monday, January 4, 2021

Bitcoin Mania!

After 2017, once again Bitcoin (BTC) is in the limelight for its astonishing & fabulous return since March'2020. When BTC crashed in 2018 from $19000 to $3000 in a year, everyone thought the story of BTC got over and this will eventually become zero being a virtual currency and not backed by any underlying asset class.

When Sensex got crashed in March'2020 and made the bottom at 26000, that time BTC also hit low at $4500 due to Covid-19 & lockdown uncertainty worldwide. Since then both Equity & Crypto markets started zooming up and while Sensex gave an 85% jump to 48000 from the respective bottom, BTC touched an all-time high of $34000 and generated a 650% return in a span of just 9 months, and the journey still continues.

Although cryptocurrency is neither legalized in India nor regulated by Govt/SEBI/RBI and you can not buy it through a Bank account even. However, cash transactions like dubba trading, very common in commodities are being done by many punters & speculators for buying & selling of cryptocurrencies. 

One thing to note that the psychology of investing always remains the same whether it's Equity or Crypto. People don't like when the market got crashed, prices available at dust cheap level, the margin of safety becomes very high and everyone is in fear. People are more comfortable buying in a standing queue when there is already sharp rallied resumed, prices are now touching sky high, the margin of safety becomes very low and everyone suffers from FOMO & euphoria. 

Now, the million-dollar question is how many people would be able to make a profit through Crypto. 

Analyst says in Equity trading hardly 10% make the profit and remaining get stuck-up, therefore sell in distress loss. In the F&O derivative segment, less than 5% make a profit and the remaining suffer from huge losses. In Crypto where speculation is very high, it is believed that hardly 1% of the crowd would gain eventually.  

Letting emotions of greed & fear can cost you huge each time.



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