Compared to fiat currencies, crypto assets have an almost inverse relationship with macroeconomic factors such as the growth of inflation, said Mr. Sumit Gupta, CEO and co-founder of CoinDCX. NDTV. “Considering the fact that crypto-assets like bitcoin (BTC) are digital tokens that can be traded directly between two parties with low transaction fees, their value is currently being influenced by the increasing rate of adoption and booming transaction volumes, âMr. Gupta said. , while discussing the factors that determine the movement of cryptocurrencies.
The industry leader’s comments come at a time when major cryptocurrencies such as bitcoin and ethereum have seen high volatility in recent months, recording heavy losses after China announced the ban on its financial and payment institutions to provide cryptocurrency services.
As digital currencies struggle to rebound, investors have again raised concerns about the volatile nature of crypto assets, compared to the predictable nature of traditional currencies.
Traditional currencies generally react to macroeconomic developments and foreign exchange interventions by central banks. However, Gupta describes crypto assets remain largely “unfazed” by unchecked measures by central banks and continue to extract value based on their usefulness as a safe, secure and deregulated financial token.
âUnlike traditional currencies, their supply is predetermined and limited to a certain maximum threshold, which is a huge price discovery factor due to increasing demand,â added the CEO of the largest cryptocurrency exchange. and the safest in the country.
The future of cryptocurrency in India
In developed economies like the United States, recent losses to major cryptocurrencies have prompted investors to post profits in stocks and other risky assets, which overwhelmingly rallied around hopes of an economic recovery.
However, in a country like India, where many people are still not used to investing in risky assets, the future of cryptocurrency in the country may be in question. âIndian investors are known to have a long-term approach to investing and remain committed to promising sectors or asset classes,â Mr. Gupta said.
As the government has yet to legalize investing in cryptocurrencies in India, many are concerned about the legal ramifications of investing in cryptocurrencies. âConcerns over the fiscal policies governing crypto assets once resolved will lead to more clarity and boost the participation of Indian investors in this promising space,â he added.
Long-term vs. short-term approach to investing: what better for the crypto markets?
Given the volatile nature of crypto markets, new investors are often reluctant to play with cryptocurrencies. But the leader of CoinDCX recommends that new investors take the plunge and research the crypto asset before taking new positions. âThey should exercise caution given the recent price volatility and would benefit from taking a long-term investment approach when it comes to crypto assets,â Mr. Gupta said.
He has special advice for anyone taking a short-term approach to investing in the crypto markets. “For traders looking to play short-term moves, it is crucial to enter significant support levels and maintain a strict stop loss in proportion to the levels above and their risk appetite.” ‘
âFinally, when we look at the past performance of major crypto assets, it is evident that investors with a longer investment horizon have enjoyed multiple returns,â Gupta explained.