In 2021, there was a marked surge in cryptocurrency investments; a trend was more particularly highlighted by Indian investors. Another noteworthy trend was that people globally chose cryptocurrency transactions as their national economies were recovering from the effects of the pandemic.
An important fact here is that among all these investors, Indians accounted for the major portion of the pie.
An average Indian may not know much about cryptocurrencies through the current times. But, it has been noted that the major investors in cryptocurrencies are the ultra rich Indians. Among all ultra rich Indians, nearly 20% have put their money in cryptocurrencies.
As per the findings of a newly published report by Knight Frank India, the percentage of ultra-high-net-worth individuals (UHNWI) who have invested in cryptocurrencies in 2021 is 18%. The obvious precedence, here, was taken by tokens and cryptocurrencies.
Nevertheless, the number of people who invested in cryptocurrencies and tokens in 2021 is merely slightly more than the number of people who have invested in non-fungible tokens or NFTs in the same year.
The report by Knight Frank India defines ultra-high-net-worth individuals (UHNWI) as the individuals whose net worth is more than 226 crores or USD 30 million. 18% of these individuals put their money in crypto assets in 2021.
10% of these 18% UHNWIs invested in one of the forms of major cryptocurrencies, which include coins such as Etherium and Bitcoin. The remainder 8% of these 18% UHNWIs invested in NFTs, as it was a raging topic in 2021.
As per the report, 2021 will be demarked as the year when cryptocurrency investments went mainstream; increasing in numbers and becoming more widespread. The Economist Magazine has further pointed out, as per the report, that by the end of 2021, the global value of crypto assets reached a figure as high as $2.4 trillion. As compared to the figures of early 2020, this was a 12-fold increase.
Ultra rich Indians have a mixed response towards cryptocurrency investments
In the report, two sides of the story have been presented with regards to cryptocurrency investments in India. Presently, the investors have a high degree of clarity with regards to the stance that the government of India is taking on cryptocurrencies. The crypto bill has just been passed. But, this never used to be the case in 2021. Then, in 2021, each of the digital assets, including cryptocurrencies and NFTs were considered to be a gray area in investments.
For the common man in India, investment in cryptocurrencies used to be a phenomenon that was nearly unheard of. The middle class would show little interest in cryptocurrency investments.
But the ultra rich Indians were also in the same line. The sense of security was missing, when it came to investment in cryptocurrencies.
Another noteworthy trend was that there were only limited resources to figure out which cryptocurrencies had a high potential of growth. The guidance with regards to which cryptocurrency channels to invest in is increasing by the day, mostly through online methods.
So, there were many cases wherein the ultra rich Indians chose to make an investment in whatever cryptocurrencies found their preferences. They would go through the cryptocurrencies’ description online and find out about the creators and the cause it stood for. If they came to feel that the cryptocurrency was going to perform reasonably well over the days to come, they would invest in it.
Understanding the cryptocurrency market would not be easy for them. This proposition comes with a certain bit of a difficulty to date, wherein the investors need to choose among over 8K cryptocurrencies to invest in.
Volatility of cryptocurrencies
Another factor that deterred the ultra rich Indians from investing in cryptocurrencies was their volatility. Time and again, we have observed sharp rises and plunges in the price of Ripple, Etherium and Bitcoin. In fact, the prices of each of the cryptocurrencies have been volatile over time, with only a few exceptions.
If one has sharp business acumen and keeps track of the direction in which cryptocurrencies are progressing every day, it is a golden opportunity for such an investor. He may even make some money by giving out trading tips.
Nevertheless, for the remainder of the people, who also form the majority, an investment in a volatile asset is not an attractive proposition. They would instead want to invest in something that promises of reliability and stability, even while the profit margin is limited. People are, basically, scared that they do not lose their money instantly.
People have expressed their opinion on the matter of cryptocurrencies
Numerous among the ultra rich Indians, most of whom are well-recognized personalities have expressed their opinions on cryptocurrencies and all bockchain related assets in general.
Just as an instance, Rakesh Jhunjhunwala is a premium investor who is known to come up with highly accurate predictions for the equity market. Jhunjhunwala has stated this month that one day, the crypto market is going to collapse. Mr. Jhunjhunwala has further added that even while cryptocurrency market will collapse, the effect over equity market will be null or negligible.
Another noteworthy instance is that of Mr. Anand Mahindra; who is also the chairperson of Mahindra and Mahindra. In late last year, Mr. Mahindra tweeted in response to the allegations that he has earned tens of thousands of dollars from cryptocurrency investments. Mr. Mahindra has dismissed all such reports, and has specified that he has not even invested one rupee in cryptocurrencies.