What the first crypto crash of 2024 is telling you
Representational image. AP
Cryptocurrencies tanked on Wednesday. It was the first ‘crypto crash’ of 2024. Hundreds of millions of dollars in market value were wiped out in just a few hours. Before this, most cryptocurrencies were on the rise. Most of them made gains throughout 2023. That streak seemed to have ended.
Apparently, crypto volatility is back. There is an old saying: ‘The greater the risk, the greater the reward.’ These days, nothing quite epitomises this like crypto. Cryptocurrencies are the new casino games, where people try and make their fortunes. The oldest and arguably best known cryptocurrency is Bitcoin, which was launched about 15 years ago.
But on Wednesday, Bitcoin and all its younger clones reminded the world that they are still active and volatile. The year has barely begun and crypto-values across the board tanked. About 600 million dollars in crypto went up in smoke in just a few hours. This was due to a report about Bitcoin Spot Exchange Traded Funds, or ETFs, which is something like a Bitcoin mutual fund.
For months, there were rumours that these would be made legal in the US. The final decision is expected next week, but on Wednesday, a report said that these Bitcoin funds could get delayed by a few months, and that caused the market to crash.
This highlights the volatility of cryptocurrencies. Before this, cryptocurrency values had been rising steadily.
On January 1, Bitcoin was at a 21-month peak. Its value had crossed 45,000 dollars. Now, it is trading slightly lower. But nowhere near its bottom value seen in the last few months. Next week could see cryptocurrencies across the board rise again. It depends on how the US chooses to deal with them. So it raises the question: Should one invest in something as volatile as crypto?
That is of course best answered by a financial professional, someone who understands your individual situation, because there’s no one size fits all answer. Crypto has made some people enormously wealthy, but many have lost their life-savings as well. One thing for sure is that crypto is volatile. Investing in it is akin to gambling. And you should never gamble with more than you’re willing to lose. Of course, this is if you’re allowed to gamble at all.
Some countries like India don’t officially allow crypto-trading, and that should have been the case for Indian investors. But it hasn’t worked out that way: Indian investors have been trading on foreign exchanges, away from the scrutiny of Indian financial market regulators. And of course, the regulators aren’t happy. So last week, India began banning what it calls ‘illegal’ foreign exchanges.
Some of the bigger ones like Binance and Kraken are on the list. Their URLs will soon be unavailable, and more exchanges will meet this fate until proper regulations are brought in. Cryptocurrencies are still a relatively new investment medium. Countries around the world have yet to figure out how to reign crypto in. Until they do, the risks will always be high. It is up to you to decide if the potential reward is worth it.
Views expressed in the above piece are personal and solely that of the author. They do not necessarily reflect Firstpost’s views.
Read all the Latest News, Trending News, Cricket News, Bollywood News,
India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.
