CAN IT BE TIME TO LOOK AT CRYPTOS?

The world of cryptos has been a fascinating one for many. It created much noise, whether moving up or moving down. Since most of these moves were large, it did manage to catch the attention of active as well as passive market players.

But the understanding was so limited and the facilities to own them or trade-in them too so limited (in India) that hardly anyone got involved, including me. The fact that the law was unclear on it and also that there seemed to be no fundamentals underlying them made it difficult for most people to take to this new asset class.

But flourish it did. And now they have been multiplying faster than rabbits! Different countries have taken different viewpoints and in India too, the views have been ambivalent. Matters took a new turn about two years ago when the Supreme Court set aside an RBI circular that banned the facilitation of crypto trade by banks. Startups in the crypto world suddenly burgeoned and the product simplification wave was unleashed. Suddenly information availability went up substantially and this was backed by a huge ad-blitz by crypto companies – the Super Bowl in the US and IPL cricket in India- ending up creating a huge sense of FOMO among the trading set.

I was not bothering much, even as I saw the ads and heard the stories. When I read some time ago that the average age of crypto players varied from 18-22, I was even more convinced that this was some kind of short-lived fad.

But two things have made me sit up and put on my thinking hat. The first was that the total number of customers for crypto has increased from 3 million to 20 million within two years. That is a HUGE growth for something largely unknown to me. Second, I saw the ad by Larry David that went viral. It was a very telling one. For those who haven’t seen it, the ad shows Larry interacting skeptically with Edison (light bulb inventor) and moon landing among other historical events. The punch line was the key: Don’t be like Larry, don’t miss out on crypto,
There have rarely been ads that have been so impactful. The fact that this one took cryptos to a different level, compared to historically significant points of the progress of mankind made me think that perhaps it may be time for me (and many like me) to take a serious look at cryptos. Maybe I am missing out on something epochal by a silly refusal to look at what seems to be charging up the world’s young and not so young. I am in neither of those categories but hell, that need not stop me!

Then I started looking a bit more and found several points of interest. One of the striking points was that the supply of Bitcoins is finite. Now that is a big one. I don’t know if it will remain that way forever but as things stand that makes it evident to me why traders have shifted from gold to crypto! Next, crypto is entirely driven by technology and that is an area that is attracting high-quality talent as well as VE and PE investor attention. These days, anything disruptive is meeting with high interest, and crypto and NFTs, etc. are creating waves in that area. Typically, talent goes into those areas, and historically, investment has always followed talent!

I was astounded to learn that 83% of the $524 million funding in 2021 went to startups directly involved in crypto! The money seems to be pouring in and it is evident that these are high-risk-high return-seeking money. Polygon took in $450 million recently and it is clear that sectors that are technologically disruptive but at the same time capable of growth and filling important gaps in the market are where the action is shifting. It is still just two months into 2022 and we already seem set to raise more money than the whole of 2021! Across the globe over $34 billion has been raised by Cryptos companies.

With all these happening across the world, I am now beginning to think that it won’t be long before crypto will get regulated properly in India. In my lifetime stock exchanges have changed from being a club (the 1970s-80s etc.) to what they are now so why should I doubt that something similar cannot happen on a much bigger scale in the crypto world?

I still have no idea about things like NFT and Web3.0 or Defi but it is getting more and more evident that all these things are getting more mature and awareness is increasing and beyond everything, returns have been fantastic! The recent budget announcement of cryptos tax has certainly set the discussions going on the legality and other matters. This is bound to lead to some definitive conclusions shortly.

It seems to me that it is time for me to start taking note of everything that is going on in the world of crypto. Maybe I am already late for the party? But from the looks of things, it seems like the party is just beginning. So is it the time to look at cryptos market ?