“I absolutely don’t have the courage to look at my crypto investments right now. They’ve been more than halved!”
Yumna Ahmad, who works as a communications professional at OP Jindal Global University, has not yet had the courage to confront the carnage that has ravaged her crypto investments over the last few weeks.
But she is not alone. This bloodshed, which wiped off about $400 billion worth of investor wealth in crypto over the last few weeks globally, impacted many young Indian investors like her. How has this changed their outlook on investing in this extremely volatile asset class? And at present, what does their crypto wallet look like?
There’s a teeny tiny silver lining now, though. With some green shoots in sight, the crypto markets are steadily hobbling back to life. The global crypto market capitalisation, currently at $1.29 trillion, is still below the $1.42 trillion mark when the nosedive began around May 12, 2022.
Even BTC and ETH, usually considered blue-chip in the crypto-verse, saw a 50% fall in their values in May. At the start of May, BTC was trading at around $40,713.89. Within a span of just two weeks, it had spiraled well below the $26,000 mark, only to steady slightly and trade currently at $29,916.26.
ETH fares no different. After hitting a monthly-high of $3,026.42, ethereum had also crash-dived to $1,748. Now at $2,016.68, the coin is also slowly on its way to recovery.
The Young Making a Beeline for Crypto
Present-day data suggests that around 21 million investors flocked towards investing in crypto last year. And despite India introducing a stringent and steep 30% tax on virtual digital assets (VDAs) like crypto this year, the enthusiasm around its adoption has not entirely waned here. As per a report by crypto exchange Gemini, more than 54% Indians in the crypto space were first-time investors.
Like Prachi, for instance. An actuarial professional working in Gurgaon, she had recently decided to set aside some potion of her salary to invest in crypto.
“But I was a bit skeptical. The allure of sky-high returns on your crypto investments is very tempting, but as someone who has just started her investment journey in the financial markets, I wanted to set more aside for investing in mutual funds.”
Hence, she began with investing just Rs 1,500 each in ETH, SOL and BTC to see where it goes. Right now, her portfolio value is swimming well below Rs 500.
There are more individuals on this boat. Karan Anand, who works as a deputy communications manager in a reputed NCR-based university, saw his investment portfolio worth Rs 7,00,000 dip significantly below Rs 3,00,000.
“I had mostly invested in coins I considered had strong fundamentals, like Ethereum, Cardano, Solana and WinkLINK, which is the one of the first DeFi projects running on the TRON network. Since it serves as the link between real-world information and its seamless availability on blockchain, I thought it would make for a good investment,” he explained.
The LUNA Trouble
The talk of the town amidst the debacle last week was the de-pegging of stablecoin TerraUSD and the subsequent thrashing of its sister coin LUNA took. TerraUSD lost its 1:1 peg to the dollar last week, causing investors to panic.
Since TerraUSD is an algorithmic stablecoin, repegging and restoring the ecosystem’s equilibrium had to be done by minting more LUNA. That caused its circulation to skyrocket to such an extent that its value crashed by almost 99.99%. Now, LUNA is struggling to survive at a meanly $0.0002102. A month ago, its price was a healthy $97.28.
Even TerraUSD, which is currently trading at $0.0577 is far from hitting the needed $1 mark. Numbers from leading crypto exchanges indicate that around 2.1 Indians lost money when LUNA hit rock bottom. And Suryakant Sharma, who works as a Senior Operations Associate at ShareChat, was one of them.
“I had invested heavily in LUNA. I ended up losing Rs 1,75,000 after it plummeted and got delisted from all Indian and global crypto exchanges. I’ve lost everything,” he lamented.
Still, Suryakant is willing to invest in crypto again, provided he finds a good opportunity. “There is immense potential to earn high returns in this space, which I want to continue exploring,” he notes.
System is The Way To Go
There are tales of caution, too. Shivam Srivastava, an avid trader and an MBA student at the Narsee Monjee University, Mumbai, saw alarm bells from afar, way before the crash.
“I had a bad feeling about all global markets and liquidated everything at the start of Russian invasion of Ukraine. I had even told my friends to exit the crypto market,” said Srivastava.
Others, like Nilesh Maurya, who works in the financial space, advocated not for a complete exit like Shivam, but rather for having a systematic plan in place.
“I lost around 45 percent on my whole portfolio. But I invest systematically and have a divided portfolio. Half of it is dedicated to investing and the other half goes towards trading. So, my investments worth $10,000 are currently down to $6,100,” he said.