Bitcoin is inching towards a major milestone, one that was considered impossible two years back. It’s worth almost $98,000 now, $98,000. The race is on for 100,000.
Imagine that one Bitcoin could soon be worth 100,000 US dollars which is more than 82nlakh Indian rupees, one Bitcoin.
What explains this sudden bull run? Simply put, it’s Donald Trump. Since his election victory, Bitcoin has been on a roll.
Just look at the trajectory. It was at $68,000 on election night. It rose to almost $75,000 when Trump won and now it’s inching towards 100,000, all because of sentiment.
Trump has not taken charge yet but indications are that he will be a crypto-friendly president, that he will reduce regulations on crypto. We saw that first on the campaign trail.
He promised to turn the US into the world’s crypto capital. His cabinet picks also indicate that. Donald Trump has selected Howard Lutnick to be his Commerce Secretary. He’s a big crypto fan.
Howard Lutnick said about Bitcoin “I have hundreds of millions of dollars in exposure to Bitcoin. Every time Bitcoin dips, I’m gonna be the buyer.”
Let’s not all reports say that Trump is mulling a crypto czar, an official tasked with boosting the crypto industry. He’s also thinking about a Bitcoin reserve. Now this is a radical idea, a new idea.
We know that countries have strategic gold reserves. Countries also have strategic oil reserves. These are held by governments or central banks.
The purpose to hedge against volatility, basically to overcome tough financial times. Reports say Donald Trump could create a similar reserve of Bitcoin. Now just to be clear, this is all speculation and market expectation at this point.
But it’s enough to trigger a bull run, which brings us to the main question. Should you invest in Bitcoin? Is this the right time to take the plunge? Never ask this question to crypto bros. Their answer is always yes.
They feel the sky is the limit for Bitcoin. But here’s a couple of factors to keep in mind if you plan to take the plunge. Number one, buying at an all-time high is never a good idea, especially a volatile asset like Bitcoin.
Yes, it could rise further leading up to Trump’s inauguration, but it could also crash if he does not live up to the expectations. So be aware of that risk.
That’s point number one. Number two, you can’t use it for transactions. Bitcoin was created as an alternative to currency, but nowadays it’s become an investment tool. Only two countries use Bitcoin as legal tender.
These are El Salvador and the Central African Republic. Elsewhere, in all other countries, you cannot buy things with Bitcoin. You can only hold it like stocks, which brings us to the third factor.
You know, here in India, it’s 30% on all crypto profits. Compare that to other financial assets. Tax on short-term capital gains is 20%. On long-term capital gains, it’s 12.5%. So crypto attracts a much higher tax in India, and that is a policy decision.
Unlike Donald Trump or El Salvador, New Delhi is not promoting crypto. It is being vigilant and watchful. So research your country’s policy on crypto. Only then should you invest. It’s a lot easier than it used to be, though.
Earlier, you could only buy bitcoins from crypto exchanges like Binance or FTX. A lot of them turned out to be shady, so the risk of investing was very high. But nowadays, you have Bitcoin ETFs, like gold or crude ETFs.
ETFs are exchange-traded funds. These are special government-regulated funds. They attract the price of Bitcoin, but you don’t actually have to own it.
No crypto exchange or wallet business, and that’s been the big feature of crypto in recent times. It’s not limited to tech bros in basements. Even non-tech-savvy people can invest in it.
Of course, whether you should or not is a decision that only you should take. Most experts say start slowly, perhaps less than 5 or 3% of your portfolio. We would say talk to your financial advisors. Do not blindly jump on the hype train. Make calculated decisions.
