Rise of educated investors will influence the cycle of crypto assets

By RAMALINGAM SUBRAMANIAN

CHENNAI: When Bitcoin was first created in 2009 by Satoshi Nakamoto, there were very few early adopters of crypto assets. But, as their prices started to show exponential returns, many individuals jumped to take advantage of the growth and became investors in the asset class.

In 2017, Bitcoin touched the $1000 mark and grew in price to $20,000 the same year, growing by 1900%. This increase in price marked the beginning of rising crypto investors and enthusiasts across the world with the “fear of missing out” on such high returns. Since then, the crypto market has witnessed rising prices, increased investor’s interest, myriad projects and developments in the industry while witnessing cycles of boom and bust.

The previous boom cycle of 2017-18 was driven by individual retail investors who invested heavily in different crypto assets. Many ICOs took advantage of these retail investors and introduced projects and coins that had little or no value and no potential growth prospects. As a result, investors lost huge amounts of money due to little or no knowledge and awareness about these projects or how the crypto markets work. But since then, the crypto market has grown and matured significantly. Large institutional investors, hedge funds and private corporations have invested in digital assets. Traditional financial institutions such as Goldman Sachs, JP Morgan and Morgan Stanley have entered the space and are offering bitcoin to their wealthy clients. Similarly, Square, a payment settlement company invested $50 million in October 2020 in Bitcoin, while PayPal started accepting Bitcoin as a payment option.

Crypto industry has evolved and seen faster adoption in India than expected. The main reasons for this acceleration are the country’s fast growing economy, tech-savvy youth population. The millennials have a great inclination towards crypto as compared to traditional saving forms, as the quintessentially decentralised nature of crypto trading gives the owner control to own and store their assets without the involvement of a third party.

As per a Chainanalysis report, India has the second highest crypto users and that the country’s crypto market grew by 641% in the last year. In another industry research conducted, 54% of the respondents were first-time crypto investors from India. Today’s crypto investors are looking to be more educated about the space before investing as 40% of the respondents in the report mentioned that they seek more educational content on the asset class before making investment decisions.

The push towards crypto education has also enabled significant uptake particularly among Millennials and Gen Z, due to their growing interest in crypto space. Young investors have developed a greater understanding of the virtual coin market, leading to sustained trading rather than just plain buying. The crypto exchanges have put a lot of efforts into investor education. They have created online education platforms offering tutorials in English and regional languages, resources and educational content on crypto assets and blockchain to enable mass awareness.

But, there are still several factors limiting the mass adoption of crypto assets. Unlike the previous crypto market cycles, it is clear that investors are seeking more information and knowledge about crypto assets before investing. Increased government regulations on digital assets are playing a vital role for investors to make informed decisions about crypto investments.

(The author is head of brand, marketing and communications, CoinDCX)