Bitcoin In India: Invest Now Or Miss The Boat?

Bitcoin is a highly sought-after cryptocurrency, but investing in it is a personal decision. While it has experienced meteoric growth since its launch in 2009, it has also plummeted to devastating lows. For instance, after reaching an all-time high of $68,789 in November 2021, bitcoin lost 60% of its value in 2022.

Experts advise caution when investing in bitcoin, as it is a highly volatile and speculative asset. Its price is influenced by various factors, including the broader economic backdrop, interest rates, and the actions of central banks.

Before investing in bitcoin, it is essential to understand the risks involved. It is also crucial to ensure you have already diversified your portfolio and are not investing more than you can afford to lose.

Bitcoin's volatile history

Bitcoins Volatile History

Bitcoin is considered a relatively volatile asset. Its price fluctuates a lot due to various factors, and it is difficult to predict what the price will do. This volatility is measured by calculating the standard deviation of Bitcoin's price from a fixed point in time, usually the opening price on a specific day. The higher the volatility, the riskier the investment.

Bitcoin's first significant price increase occurred in October 2010 when its value rose from less than $0.10. Since then, it has had a volatile trading history with several rallies and crashes. In 2011, it started the year at around $1 and reached a peak of $29.60 in June, but then dropped to about $5 by the end of the year. In 2013, it started the year at $13, crossed $100 by April, and $200 by October. It then crossed $1,000 in November and ended the year at $732.

Bitcoin's price movements reflect investor enthusiasm, demand, and supply. It was designed to be used as a currency in daily transactions, but it has become more than that. Traders started betting on its price changes, and investors turned to Bitcoin as a way to store value, generate wealth, and hedge against inflation.

In 2017, Bitcoin's price hovered around $1,000 until it broke $2,000 in May and then skyrocketed to close at $19,188 in December. However, by the end of 2018, its price had dropped to around $3,000. In 2020, the COVID-19 pandemic and subsequent government policies accelerated Bitcoin's rise, and it ended the year at $28,993.

Bitcoin's price continued to surge in 2021, surpassing $40,000 in January and reaching a peak of $64,895 in April. However, by July, prices had dropped by 50%, closing at $30,829. The cryptocurrency reached another all-time high of $69,000 in November 2021 before closing the year at $46,211.

In 2022, Bitcoin's price gradually declined, falling below $23,000 in June and ending the year below $20,000. Fortunes changed in 2023, with Bitcoin opening the year at $16,530 and rising consistently to end the year at $42,258. In March 2024, it exceeded its previous all-time high, reaching $73,750.

Bitcoin's price is influenced by several factors, including supply and demand, investor sentiment, regulatory activity, and competition from other cryptocurrencies. It is also affected by macroeconomic conditions, such as interest rates, inflation, and the labour market.

While Bitcoin has experienced immense highs, it has also fallen to devastating lows. Its volatile nature makes it a risky investment, and experts recommend allocating only a small percentage of your portfolio to it.

Pros and cons of investing in Bitcoin

Pros of Investing in Bitcoin:

• Bitcoin is the first-ever cryptocurrency, making it a prestigious and desired asset.
• It is the most well-known cryptocurrency, and most crypto traders start with Bitcoin.
• Bitcoin is decentralised, meaning there are no centralised authorities or central banks that may impose high fees or restrictions.
• It is global, so there are no exchange rates to deal with.
• You don’t need a fortune or credit history to invest in Bitcoin.
• Bitcoin is highly liquid, making it easy to trade.
• It is transparent, as it is a public ledger that allows everyone to see transactions as they are stored permanently on the blockchain.
• Bitcoin is an excellent way to diversify your portfolio.
• Because of its supply cap of 21 million coins and decentralised nature, some believe that Bitcoin is immune to economic turmoil, geopolitical problems, and inflation.
• Bitcoin has various features, such as multi-signature authorisation, that can improve transparency and security in business settings.
• Figures show that Bitcoin has a significant ROI compared to other assets.
• It is the safest crypto asset to invest in because the high number of users across the globe help decentralise the network.
• Huge names have become major investors in Bitcoin and have been very vocal in their support.
• Smart contracts can be built on Bitcoin.
• It is a hedge against inflation.

Cons of Investing in Bitcoin:

• Bitcoin is highly volatile.
• Bitcoin transactions are quite slow.
• Bitcoin has limited use and depends on Internet availability.
• Bitcoin is not 100% safe.
• Bitcoin investing is not regulated, and a lack of regulations can lead to fraud and scams.
• Bitcoin is misunderstood and veiled in misconception.
• Bitcoin is not energy-efficient.
• It will not make our financial system fairer.
• Community disagreements have split Bitcoin before.
• Quantum computers could overpower the Bitcoin network.
• Bitcoin doesn’t work as intended.
• Satoshi Nakamoto’s identity and disappearance raise many questions.

How to buy Bitcoin in India

Step 1: Choose a crypto investment app/exchange

There are many cryptocurrency apps and exchanges available in India, so it's important to research and find one that suits your needs. Some factors to consider include security features, the range of cryptocurrencies offered, user-friendliness, platform fees, customer support, and reputation. Examples of crypto exchanges in India include CoinDCX, CoinSwitch, WazirX, Mudrex, and Binance.

Step 2: Sign up and complete KYC verification

After selecting a platform, you'll need to sign up and create an account. This typically involves providing personal information such as your name, email, phone number, and Aadhar details. In India, financial platforms are required to complete Know Your Customer (KYC) verification, so you'll need to submit documents like your Aadhar and PAN card for identity verification.

Step 3: Add funds and place an order

Once your account is set up, you can add funds to your account using various payment methods, including bank transfers, UPI transfers, or credit/debit cards. After funding your account, you can place an order to buy Bitcoin. Search for Bitcoin (BTC) on the platform, check the latest prices, and enter the amount you wish to purchase.

Step 4: Select a storage option

You can choose how you want to store your Bitcoin. Some platforms offer integrated wallets or partner with third-party providers for storage. Alternatively, you can use hot wallets or cold wallets to store your Bitcoin. Hot wallets are connected to the internet and offer convenience, while cold wallets store your Bitcoin offline, providing an additional layer of security.

Step 5: Monitor and manage your investment

After purchasing Bitcoin, remember to monitor the market and stay informed about price movements and external factors that can impact its value. You can decide to hold your Bitcoin for the long term or sell it through the same platforms you used to purchase it. Keep in mind that Bitcoin is a volatile investment, and its value can fluctuate significantly.

The legal status of Bitcoin in India

In 2021, the Indian government explored the possibility of creating a state-backed digital currency, while banning private cryptocurrencies like Bitcoin. However, with the growing popularity of Bitcoin in India, it seems unlikely that the government will implement a complete ban.

To purchase Bitcoin in India, investors must submit essential documents, including the Aadhaar Card and PAN card, and complete the KYC process. They can then place an order on a cryptocurrency exchange and transfer funds from their bank accounts. It is important to note that any transaction in Bitcoin is registered with the respective wallet IDs.

While Bitcoin is a legal investment in India, it is important to approach it with caution due to its extreme volatility.

Bitcoin's performance in 2024

As of 13 August, Bitcoin's price stands at $59,758, with a 24-hour increase of 3.14%. One forecast predicts that by 14 August, its value will increase by 14.8% to $68,603. Another source predicts that by the end of the year, Bitcoin will trade at a new all-time high of over $75,000.

Other predictions for the rest of the year are more varied. One forecast estimates that the maximum price in August will be $75,758.54, with a minimum of $60,212. For September, the maximum is predicted to be $75,136.33, with a minimum of $61,413.96. In October, the average price is expected to be $62,103.73, with a minimum of $60,026.98 and a maximum of $64,180.47. In November, the minimum is expected to be $59,698.44, with a maximum of $64,398.09, and an average of $62,048.27. In December, the minimum is expected to be $61,205.89, with a maximum of $73,959.65, and an average of $67,582.77.

Looking further ahead, some sources predict that Bitcoin's price will reach $100,000 in 2025. By 2026, it is expected to be worth between $143,329 and $174,719, and by 2027, it could be worth between $203,668 and $249,565.

Frequently asked questions