Cryptocurrencies emerged as one of the most discussed topics in 2020, and rightly so! The tremendous growth these digital currencies saw during the pandemic was nothing short of a dream run. A growing crypto atmosphere, ease of access, and high profitability were some of the many reasons that paved the way for many new investors to join in. Millions of new investors accepted cryptocurrency as a viable investment, and many more are still joining in every day. However, there still seem to be doubts in the minds of many new and seasoned Indian investors, which is why they shy away from dropping a single buck in crypto. But why is that?

Why are investors running away from crypto?

There are many reasons why investors are still struggling with the notion to add cryptocurrency to their portfolio. Here are some of them:

Limited understanding

A vast majority of investors have been trading and investing in traditional financial assets for years now, and the technical side of how a cryptocurrency works still eludes them. Many investors still struggle with the idea of digital assets as financial investments, which obstructs them from investing in crypto.

Lack of centralisation

The crypto market is decentralised and unregularised, which is why many investors switched to crypto in the first place. Simply put, there is no regulatory body that oversees the currency, the transactions, and the overall market. However, this unique feature may also be working against it. Many traditional investors are petrified in putting in money where they don’t have a centralised regulatory body.

Dearth of Big Players

The global dais for cryptocurrency is populated by big names. Elon Musk’s Tesla made the headlines some time back with a $1.5 Billion investment in Bitcoin, the biggest cryptocurrency in the market. Musk stated that Tesla would also accept Bitcoin as payment for its products. Many other companies, too, have started accepting crypto as a valid form of payment. However, back home in India, there is a dearth of big players who are actively investing in crypto and inspiring others to join in.

Huge Price Variability

If you are into financial investments, know about cryptocurrencies, or just read the news sometimes, you would know about the price fluctuations of cryptocurrencies. There is no denying that the price of cryptocurrencies is volatile, predominantly due to its trade on perceived value rather than a set value. However, many other assets are traded similarly, particularly gold, which always finds itself compared to Bitcoin.

Frauds and Scams

While the crypto ecosystem has now moved away from frequent frauds and uninformed traders, it still faces such issues from time to time. Investors in India have been sparring with promises of impossible returns, crypto multi-level marketing schemes, hacked wallets, and many more such cases. The average investor still finds it challenging to trust crypto exchanges with their investments, so they pass crypto investments altogether.

Varied regulations across borders

As you change international borders, you will find various regulations on cryptocurrencies. For example, Japan accepted Bitcoin as a valid form of payment. China, however, has decided to create a centralized digital Yuan that will work as a cryptocurrency to pay for goods and services. India, too, is looking to impose a blanket ban on all cryptocurrencies and introduce a Digital Rupee under India’s financial apex body, the RBI. These various regulations sometimes stop new investors from investing in crypto, as the digital assets’ future seems uncertain.

Crypto is a safe bet to make

Crypto has time and again proven its worth to investors with good returns over the years. As new investors jump onto the hype train, investing in crypto has never been easier. While it may seem like a risky investment, it tells the same risk story that other financial assets have been narrating for years. The market cap of cryptocurrency has crossed over $1.5 trillion and is expected to grow even higher in 2021. Big banks such as JP Morgan are also suggesting investors invest 1 per cent of their portfolio in crypto. Indian investors should also look beyond these minute risks and start investing in cryptocurrencies.

The author is Co-founder and CEO of Mudrex, an algorithm-based crypto trading platform.

DISCLAIMER: Views expressed are the author’s own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.