MUMBAI: The quest for multibaggers often leads investors to seemingly obscure stocks that would be the blockbusters of the future. In the past two years, however, money managers may have done better if they had chosen the least likely growth asset – the currency.
The once non-descript bitcoin, a crypto currency, has returned more than 10 times since 2015, with the price of the digital instrument hitting a record Rs 2,25,000 a unit in the domestic spot market last week. Trading in bitcoins is gaining traction, especially among those aged 18-35 years and seeking to harness volatility for extra-ordinary returns.
“The increasing awareness of bitcoins worldwide, particularly about its revolutionary technology, has triggered a rally in the bitcoin market,” said Sandeep Goenka, cofounder and chief operating officer at Zebpay, an app-based bitcoin exchange.
“Japan has now added itself to the list of countries that have regulations for bitcoins. Due to these positive factors, bitcoin prices have been showing tremendous strength.” With an expert committee in India now seeking to regulate domestic trading of bitcoins, prices are expected to leapfrog in the next one year. Since April, Japan’s legalization of the digital currency has contributed to the rally in bitcoins. After Tokyo’s move, many vendors have started accepting the virtual currency: Peach Aviation, for instance, is going be the first Japanese airline to accept bitcoins as payment for plane tickets.
Trading volumes and prices have risen in lockstep with increasing interest in India in bitcoins. In June, 2015, the prices were about Rs 20,000 per bitcoin. They surged to Rs 2,25,000 recently, dealers said. In the past few days, it has pared gains partially, and now trades about Rs 1,83,000 per unit in the round-the-clock market. Sahil Shah, a final-year BBA student of Nirma University, Ahmedabad, has sold four bitcoins at roughly Rs 2.20 lakh a piece versus Rs 70,000, the average price at which he acquired those.
“This rally was almost a bubble, but it gave a solid profit-booking opportunity for investors who bought bitcoins two – three years ago. I will buy back once prices correct a bit more,” said Shah. It is not necessary to buy one bitcoin. One can even buy a fraction of it.