Do you know you are already holding Bitcoin and other crypto currencies?
Do you know you are already holding Bitcoin and other crypto currencies?
Are you someone who invests in global or US based mutual funds from India, then you might already be holding some bitcoin and other crypto currencies. Does it sound confusing, well, actually not. Let’s discuss about this in detail.
As an indian investor, you are not legally allowed to invest on crypto currencies. And most of the indian’s don’t want to invest in cryptos either. That includes me as well. My personal take on crypto is simple. There is no underlying asset and no one back it up. So it a pure hype and scam. So I am completely against investing in cryptos.
But at the same time, I am strong believer of investing part of the corpus in global markets for geographical diversification. This is where problems comes. Most of the global companies, including the ones in US doesn’t have any restrictions on investing in cryptos like bitcoin.
So, some companies do exactly that. They invest part of their free capital in cryptos to generate additional asset, thereby they expose me to crypto as well.
For example Tesla, Tesla is part of S&P 500 index and I invest in S&P 500 through MO S&P 500 Fund. So, I am indirectly getting myself exposed to cryptos.
Due to crypto craze, lot of companies in US started investing in cryptos. This is where problems begin to pile up. As these companies expose towards cryptos increase, we as investors are equally exposed to crypto crash.
As of today, more than 50+ companies have invested in cryptos and the trend is growing.
As an investor, I invest in stock of a company because I believe in it’s business and in the longterm business will be successful and profitable and I will be able to get some of those profits.
But if that company invests part of their cash in crypto to generate some profits on the sides, it sounds meaningless to me. So I would personally avoid investing in such companies as it sounds as if they don’t believe in themselves to generate good profits.
Also, If I want to invest in crypto, I can do it myself directly instead of going through this route if gaining indirect exposure. Atleast I will get more control this way.
Anyway, this crypto craze of companies should stop or market regulator should step in to stop this madness, else one by one, all the companies will get suck into crypto bubble due to the FOMO and when crypto crashes, the entire world market will be exposed to it and will drop wildly.
If this goes unchecked, even 80–95% crash can happen in equity market, which is something no one had seen or no one would be prepared for. Crypto market can and will crash 100% some day. It is inevitable.
So stay careful and keep an eye on this, especially over the next few years as it is one of the dangers lurking around the equity market.
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