When the Bitcoin price falls, is cryptocurrency still worth buying?
The crypto winter attacks and recent events have ruined the spirit of crypto investors. Various incidents such as the recent outages where Vauld (a leading crypto exchange platform) stopped the withdrawals and closed their business, Voyager Digital (a crypto broker) filed for bankruptcy, the collapse of Luna crypto and many such cases around the world are shaking up investors.
Is it still safe to invest in cryptocurrency? What do the experts say
Archit Gupta, founder and CEO of Clear, says that the price of Bitcoin, the first and most prominent crypto, rose to $ 68,000 in November 2021. Shortly afterwards, the price almost halved to $ 35,000 and continued to fall. Today, it stands at around $ 21,000. This tells us about the volatility and speculation in the crypto markets. Given the macroeconomic environment, market volatility and mass flight of investors from the market, the scope of demand and supply is sharply tilted, which further increases the risk.
On top of that, the new tax rules increase investors’ troubles. The government announced that 1% TDS must be deducted on all crypto transfers ₹10,000. “These tax rules will increase the regulatory and compliance burden. The tax rules have further increased the challenges as they can unlock the liquidity needed to revive the crypto markets, “said Archit Gupta.
He added that given how people invest in crypto with little knowledge and more influence, one must appreciate these regulations, as they will only help secure investors’ money.
Vikas Singhania, CEO, TradeSmart says, apart from TDS, brokerage and GST fees have increased the risk of trading cryptocurrencies.
«TDS of one percent on Cryptocurrency implemented from 1 July is a dampener for assets in the asset class. Although it may not affect investment volume, trading volume in the sector will certainly be affected. “Just an example of how it will affect the trader – If a trader takes 10 trades in a month, he must earn at least 10 percent on those trades cumulatively, just to recoup TDS costs,” Singhania said.
“On top of that, brokerage and GST fees have added more risk to cryptocurrency trading. Whatever remaining profits will now be subject to capital gains and other fees, making a profitable life of cryptocurrency more difficult for investors,” he said.
Meanwhile, Bitcoin – the world’s largest and most popular cryptocurrency – traded at $ 19,925, down more than 3%. Bitcoin is more likely to fall to $ 10,000, and roughly halve its value, than it is to rise back to $ 30,000, according to 60% of the 950 investors who responded to the latest MLIV Pulse survey. Forty percent saw it go the other way. Bitcoin has already lost more than two-thirds of its value since reaching almost $ 69,000 in November and has not traded as low as $ 10,000 since September 2020.
