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Cryptocurrency has made a startling comeback in India since March 2020, when the Supreme Court invalidated a Reserve Bank of India ban on crypto trading. According to industry estimates, about 15 million Indians have sunk more than $1 billion equivalent into it. 

Now, a set of investors and traders see it as a vehicle for retirement. Financial experts, however, remain cautious; they point to uncertainty over the cryptocurrency regulations in India and the volatility of cryptos.

For Priya Ratnam, investing in cryptocurrencies is the fastest and the easiest way to build wealth. Ratnam is an MBA graduate and is currently pursuing an LLB degree. She is founder/owner of an IT services company that works on blockchain and cloud security technologies.

Her basic plan is to retire with crypto investments as she believes that this asset class can give much better returns and has a lot of scope. “Financial freedom to me is when you reach a place where everything looks cheaper. Because of crypto, I have completely achieved whatever I had thought of," says Ratnam, who has come a long way from her first investment in bitcoin in 2016.

Today, 30% of her crypto portfolio is in bitcoin, while the remaining 70% is distributed among other coins, with 10% going to non-fungible token, or NFT,-based projects. To mitigate risks, her non-crypto investment is in gold in the form of jewellery and real estate. She exited her stock positions some time ago.

Ratnam is among a growing breed of investors that is increasingly looking at cryptocurrencies as a fast way to accumulate wealth to retire.

Over the past half a decade, cryptocurrencies such as bitcoin and ether have rewarded investors in a much bigger way than traditional asset classes. To put things in perspective, the world’s biggest cryptocurrency, bitcoin, has surged around 1,000% in the past five years. While the BSE Sensex has risen around 100% in absolute terms, gold has given around 40% returns during this period.

Driven by the overturn of RBI ban last year and a sharp rise in prices of cryptocurrencies since the start of the year, users on Indian crypto exchanges have exploded. From about 1.5 million users at the end of December, CoinSwitch Kuber today has around 9 million users.

Also, from 1 million users in January, WazirX has grown to 7.6 million users as of today. Even, CoinDCX recently became India’s first crypto unicorn after raising $90 million in its Series C funding round, which was led by Facebook co-founder Eduardo Saverin’s B Capital Group.

There are two main thoughts driving investing in cryptocurrencies; one is that the blockchain technology will power everything from banking institutions to the art arena (read non-fungible tokens) in the future. The other factor is returns delivered by cryptocurrencies such as bitcoin and ether, which had led to many investors flocking to this market.

Kanav Aggarwal, 27, has been trading and investing full-time in crypto for the past two years. His plan is to take short sabbaticals.

“I will never go offline permanently in crypto. I will get out of the market to enjoy the gains in the short term, take a temporary break and wait for the opportunity to come back in again," says Aggarwal, who left his practice as an advocate a few years ago.

However, for Aggarwal, the journey into crypto started on a sour note in 2016; on a friend’s suggestion, he invested more than $1,000 in a scam coin, the money that he eventually lost. He didn’t lose hope and educated himself about the whole cryptocurrency space.  Today, his portfolio is 100% in crypto, with 25% in long-term holdings such as bitcoin, ether, solana, chainlink and polkadot, and 75% in cash. 

“Crypto is riskier than traditional assets but the volatility is the right opportunity to increase the portfolio. As a crypto trader, one should have enough cash pile to aggressively buy on dips," he opines.

While cryptocurrencies have rewarded holders in a big way, not all investors are head over heels in this new asset class. Akash Rajpal, a 47-year-old healthcare professional, working in a business-to-business healthcare company, is holding 10% of his assets in cryptocurrencies.

“You invest in crypto only what you are okay losing," says Rajpal, who is also an avid stock investor and has held a demat account since 1997. “I feel the technical charting that we do for standard stock trading, one should have that knowledge because the same underlying principles are also applied to crypto. If you don’t want to lose money, you must know about technical charts," says Rajpal, whose first investment in crypto was in bitcoin, four years ago.

Unlike stocks, which is a five-day-per-week affair, crypto trading doesn’t stop for weekends or even holidays. This, as per Rajpal, is one of the main advantages of the crypto market, as he doesn’t have to worry about it during working hours. The 365-day, 24x7 nature of this industry is also enabling women to take up crypto investing in a big way.

According to Ratnam, investing is much easier when it comes to crypto as women can easily manage their household work and trading.

While investors are increasingly getting attracted by meteoric returns given by some of the digital assets, financial experts have a word of caution. “One big disadvantage is that prices are very volatile, rising and falling at a very rapid rate. Traders want to profit using it, but for genuine investors, it can be a little too dangerous. 

“But the bigger hitch is that cryptocurrency laws and access differ from one country to another, and often they are ambiguous," said Amit Kumar Gupta, a New Delhi-based portfolio manager at Adroit Financial Services Pvt. Ltd, a Sebi-registered portfolio management firm.

His advice to investors is to contain crypto investment to 2-5% of one’s portfolio, with 1-2% for a conservative portfolio. According to Suresh Sadagopan, founder, Ladder7 Financial Advisories and a Sebi-registered investment adviser, investors shouldn’t think of retiring in crypto. “It could happen for some people, but most may lose their shirts and pants. They shouldn’t go headlong into it and think of retirement. There is just no shortcut to doing things in the proper manner: investing properly, having discipline, regularity in investments in the traditional asset classes, which are tried and tested," Sadagopan said.

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