Cryptocurrency Investment in 2022 and the Challenges

mabarsport.com- Talking about Cryptocurrency Investment in 2022 and the Challenges, we have to look at the development of croptocurrency in India as the country with the most investment population in the world to be used as a reference in investing in cryptocurrencies.


Everyone believes that there has been a lot of innovation in the financial sector in recent years. cryptocurrency is a recent example of this. those who invest in it thrive. According to estimates, crypto investments in India are worth more than Rs 45,000 crore. one and a half to two crore people have invested in cryptocurrency. this number is the highest in the world. in market parlance, people are bullish for this sector. 

It is estimated that by 2032, these digital assets could contribute more than $1 trillion to our economy. it is also seen as a major source of foreign investment. there is hope for thousands of jobs. many industries declined in 2020 but crypto industry created thousands of jobs. however, the rules and regulations for this sector are not yet clear. Future budgets are expected to reveal something concrete about this. The speculation of a crypto ban has increased, but after a huge amount of investment, the government can barely ban crypto altogether.

There is a proposal for a bill for cryptocurrencies, where it is possible that sebi could be given responsibility for monitoring the sector. Some of these aspects can be monitored by the Reserve Bank of India. may be allowed to invest in the same way that ordinary people do in the stock market. if this happens, then stability is expected to come in the cryptocurrency market. retail investors will also get new assets. in the budget, it can also be clear how to tax profits in cryptocurrencies. for this, changes can be made in the income tax law. 

The income secretary of the bajaj tarun said that some people are already paying capital gains tax on the income from cryptocurrencies. the law for gst is also 'very clean'. This bill will clarify what the role of the exchange will be, what responsibilities will be performed by the token issuer and the wallet issuer. mining, trading and crypto encashment may be taxed separately.

It hasn't been that long since crypto emerged as an asset, so it's understood that investors don't have much understanding of the product. concerns about how to protect their interests were repeatedly raised. there are also indications that crypto advertising is not misleading, this is also starting to give way. if the trust of money lenders is maintained, the volatility in the market will be lessened. investors will remain in the market. they will understand what is the difference between digital assets and other types of assets. 

Over the past few years, the government's great concern has been that crypto funds can be misused and can become a weapon against national interests. the budget can emphasize on how to verify investors and how operators report investments, how to audit transactions will also be decided. Recently, the Financial Action Task Force has provided guidance to countries around the world for digital assets.

All the budgets that have come before have emphasized that those who are not connected to the mainstream financial system should also be linked to it. Future budgets can also be an opportunity to meet this goal. experts say that this budget should be an important tool for major economic reforms, for this it is necessary to look at cryptocurrencies. people associated with start-ups have also asked the finance minister for the same. he said that for the budget, it is necessary that the taxation related to crypto be fixed. it should be given the status of a digital asset, not a digital currency. rules relating to foreign exchange must be applied. such as the banking sector, foreign investment of up to 74 percent must be allowed in it.

According to a report, recently there has been a lot of thinking about cryptocurrencies from the finance ministry to the prime minister's office. imf chief economist Gita Gopinath also held talks with the government on crypto. Gopinath says that instead of banning crypto, it needs to be regulated. it is possible that by recognizing crypto as an asset, the government could bring it under the tax net. even before the winter session of parliament started, finance minister Nirmala Sitharaman also said that cryptocurrency will be regulated, it will not be banned. a few days before the session started, the finance ministry's revenue secretary said that the ministry wants to bring crypto under the tax net, as when people earn from crypto, taxes should also be charged from them. by the way, the reserve bank supports a complete ban on crypto and has put its stand on it. prime minister narendra modi will take the final say on cryptocurrency rules amid differing opinions.

Now let us tell you the history of the cryptocurrency rupee in india, dollar in us, pound in uk. it is physical currency that you can see, touch, and use. but the cryptocurrency story is a bit different. it is a digital currency, with the help of which transactions can be made between two computers. like other currencies, it is not printed by the government or state banks. it is most often used for investment. Cryptocurrency was first introduced in India in 2009. Despite its large-scale use, reserve banks did not like it. maybe his attitude will change later. 

Central banks around the world have started issuing their own cryptocurrencies. some claim this is a legally valid transaction, while the rest take a waiting approach. in 2018, when arun jaitley was minister of finance, he said in his budget announcement that the government did not consider cryptocurrencies legal and wanted the use of these currencies reduced. the central government has requested an audit report to be prepared in this currency. Meanwhile, amid the changing environment around the world in favor of cryptocurrencies, the supreme court has overturned the 2018 ban on crypto asset trading.

Cryptocurrency Challenges in 2022

In November of 2021, Bitcoin price was at an all-time high of around $69,000. But since then, it has fallen below $43,000. The same is true for other crypto coins, including Ethereum. This is a matter of great concern for retail investors putting money into crypto. In particular, new investors, who have invested money in the last six-seven months, are doing well. What is the reason for such softening in cryptocurrencies? Let's explore these aspects.

Budget 2022 is coming, speaking of Bitcoin, it dropped drastically in December after setting a record high in November last year. After that, borrowers began to leave this market. But new investors don't come forward with large sums of money in their place. The arrival of new investors is very important. The real atmosphere of the crypto market is like this. Bitcoin enthusiasts may have celebrated their 13th birthday on January 3 this year, but the mood of seeing the cryptocurrency as a long-term asset has not yet been created. In such situations, people buy on the decline and sell when the price rises. But this time, even if bitcoin drops by 35 percent, the emphasis of those adopting this strategy is invisible.

In fact, the enthusiasm of the crypto market has cooled. Since 2019, central banks around the world have provided relief packages, interest rate cuts, cash being pumped into the market by buying bonds, all of which have been talked about for some time now. The Bank of England has even raised interest rates to tackle inflation. The US Federal Reserve has announced cuts to its bond-buying program. He will also raise interest rates soon. This will make it expensive to borrow and invest. This has had a huge impact on crypto-related sentiment. Bitcoin, which was around $47,000 on January 1, fell below 43,000 on January 6. Due to the crash caused by the US Fed's signal on interest rates, the total value of the global crypto market fell more than 6 percent to under $2.5 trillion between January 5 and 6. Between January 5 and 6, more than $810 million worth of crypto futures was liquidated. Liquidation mainly occurs when an exchange forcibly cuts a merchant's loan deal. This is done to avoid the risks associated with margin.

The second largest cryptocurrency Ethereum has also been hit hard by signals from the US Fed. Between January 5-6, prices fell about 10 percent. On November 10 last year, it touched an all-time high of $4,850. But due to the softening that started in December, it has now dropped to around $3,300. In January last year, the price of ethereum was around a thousand dollars. It finished the year with an increase of nearly 400%. But now it seems that the slopes in it could stretch for a long time. From Dogecoin, Shiba Inu to Solana, Polygon, Uniswap and Cardano, coins are also declining.

The crypto mining factor is also behind the coin price crash. Concerns regarding the widespread use of energy in crypto mining have been raised. In December, amid a soft environment, stocks that mine cryptocurrencies also showed a decline. MicroStrategy is down about 20 percent and Riot Blockchain more than 35 percent. Investors don't see coins and stocks separately. Thus, the softening mood in one has an effect on the sentiment associated with the other.

Behind the softening of the crypto market in the new year is also a regulatory-related event in the US. The US is currently the largest bitcoin miner in the world. Many Chinese miners have also set up their bases in the US to circumvent the strict rules in their country. In such situations, the indiscriminate use of energy has raised environmental concerns in the US. The US Congress will hold a hearing on the impact of crypto mining on the environment. The trial could take place at the end of January or later.

Previously, amid the rising cases of Omicron and the central bank's tightening measures, big investors had also made heavy investments in cryptocurrencies in the last days of December. According to FalconX, many US funds increased investment in late December. Experts in the crypto market say that the ups and downs will remain for some time. He said that the price of Bitcoin could be between $40,000 and $55,000. 

But Goldman Sachs' estimates are very different. He said that given the way digital assets are being adopted around the world, people will switch from gold to them. If this happens, bitcoin's market share will increase. Goldman said that if this were to happen, it would not be surprising if the price of Bitcoin rose to a million dollars.

In conclusion, you can invest in Cryptocurrency if there is a guarantee from the government that regulates Cryptocurrency and its accountability. Whatever the price issue, those who put money into crypto should keep it in a tight place that whatever money they have to invest, don't invest more than 5%-10% in crypto. Also keep in mind that putting the same money in it, which will not be a big blow to your financial health even if it sinks.

That's how Cryptocurrency Investment in 2022 and the Challenges was made

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