The repeal of the Reserve Bank of India’s (RBI) crypto ban has driven a boom in exchanges launching in India, offering hope that the growth of a robust local industry will incentivize lawmakers to maintain India’s permissive regulatory apparatus.
In March, India’s Supreme Court repealed the Reserve Bank of India’s (RBI) ban on financial institutions providing banking service to businesses operating with virtual currencies — legitimizing India’s cryptocurrency firms.
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$1,000 Is Shockingly Worth This Much If You Bought Top 10 Crypto Assets In 2018
A currency dealer monitors exchange rates in a trading room at the KEB Hana Bank in Seoul on August … [+] 6, 2019. – The Chinese currency steadied on August 6, a day after Beijing let the yuan weaken against the dollar, sending markets into freefall and leading the US to formally designate China a “currency manipulator”. (Photo by Jung Yeon-je / AFP) (Photo credit should read JUNG YEON-JE/AFP via Getty Images)
An anonymous investor bought $1,000 worth of ten top crypto assets on January 1, 2018 and regularly kept track of the portfolio’s performance.
At the time, top crypto assets by market capitalization were: Bitcoin, XRP, Ethereum, Bitcoin Cash, Cardano, Litecoin, IOTA, NEM, Dash, and Stellar.
The investor put $100 in each of the top ten crypto assets and measured their performance over time.
As of June 1, 2020, the $1,000 portfolio was worth $205.19.
The performance of top ten crypto assets bought in January 2018.
It recorded a 79.48% loss after two years and five months, as the price of Bitcoin dropped from $13,170 to $10,112,
Since June 1, the price of Bitcoin declined further to $9,400 after a sudden 9% intraday plunge on June 11. As of June 13, the $1,000 portfolio is worth less than $200.
The $1,000 portfolio was created after the price of Bitcoin had crashed from its record high at above $20,000 on BitMEX to $13,170 by around 34%.
Hence, the capital was invested during a period in which retail investors could have reasonably thought to invest in cryptocurrencies. It followed a strong fear of missing out (FOMO) rally in December 2017.
Three key regions saw extremely high demand from retail investors: China, South Korea, and Japan.
The demand for cryptocurrencies was so high back then that the premium of Bitcoin in South Korea’s crypto market exceeded 20%.
When Bitcoin was being traded at around $20,000 across the world, the price of Bitcoin in South Korea rose to as high as $24,000.
The price of Bitcoin hit $24,000 on South Korea’s biggest exchanges.
In January 2018, prices of crypto assets had come down with increasing regulation from governments.
As such, retail investors that did not enter the market prior to the rally in 2017 could have considered that it may have been a compelling time to invest in cryptocurrencies.
However, late 2017 to early 2018 was when even industry executives and cryptocurrency developers thought crypto assets were overvalued.
Vitalik Buterin, the creator of Ethereum, famously said during the run up of Bitcoin to its all-time high that he did not believe the crypto ecosystem had done enough to achieve a $500 billion valuation.
“So total cryptocoin market cap just hit $0.5T today. But have we *earned* it? How many unbanked people have we banked? How much censorship-resistant commerce for the common people have we enabled?… The answer to all of these questions is definitely not zero, and in some cases it’s quite significant. But not enough to say it’s $0.5T levels of significant. Not enough,” Buterin said in December 2017.
Crypto assets including Bitcoin are increasingly being considered as stores of value as time passes. But, the majority of cryptocurrencies are still experiments after all, which contain a considerable risk of failing over the long-term.
Out of the abovementioned top ten cryptocurrencies, only six remain as leading assets.
Bitcoin has seen a noticeable increase in institutional adoption, improvement in infrastructure, a rise in liquidity, and strengthening fundamentals over the years.
Still, the performance of the $1,000 portfolio suggests investors have to approach crypto assets with caution, like other high-risk assets like single-stocks, when investing with a long-term thesis.
Author: Joseph Young
Big Blow To The Crypto Dream: India’s Government Calls For Blanket Cryptocurrency Ban Again
Since July 2018, domestic commercial banks in India were prohibited by the Reserve Bank of India (RBI) from servicing cryptocurrency exchanges and all other businesses dealing with virtual currencies due to a circular that the Central Bank had released.
In March of this year, the country’s apex court lifted the banking bank that had literally stifled cryptocurrency trading in Asia’s third-largest economy. However, while this decision revived the crypto landscape in India, the finance ministry is now suggesting a law that would ban cryptocurrencies in the country.
According to a report from Economic Times, the March decision by India’s Supreme Court has prompted the finance ministry to propose a sweeping ban on cryptocurrency trading.
“A note has been moved (by the finance ministry) for inter-ministerial consultations.”
As things stand, the regulation is at a preliminary stage with the note expected to be sent to the cabinet after several consultations and then forwarded to the parliament for approval.
The news publication cites experts who warn that this proposal will deal a severe blow to investors and crypto exchanges if it indeed bears some similarity to the blanket ban proposed in 2019.
In July 2019, a government inter-ministerial committee had recommended a ban on cryptocurrency trading. The committee had also proposed a 10-year jail term and/or a penalty of up to 25 crore rupees (approximately $3.3 million) for anyone caught conducting any activity connected to cryptocurrencies.
The proposal had at the time forced crypto exchanges to either completely close shop, migrate to other crypto-friendly jurisdictions, or change their model to peer-to-peer to bypass the limitations. Yet, with the Supreme Court’s ruling a few months ago, crypto businesses like Binance and CoinDCX had started moving to increase their Asian presence.
With the new proposal, these companies will have to put their expansion plans on hold for now. Commenting on the new development, AKM Global partner Amit Maheshwari argued that if the proposal passes, it “would completely decimate the crypto industry in India.”
Ultimately, overturning the RBI order by Supreme Court was just the very first step towards reviving the crypto dream in India as the country is now facing a confluence of factors that could derail crypto adoption –not to mention the surge in coronavirus cases in the country.
Author: By TeamMMG