Crypto or Platinum? Which is best for investment is a question that many ask, and many want the answer to. Maybe some people will argue that no crypto is a waste of money and has no market in India after the crypto tax, and while they might acknowledge that Platinum is still a resource and its value will rise for sure, and there is no risk in it. But first, we have to understand how crypto works and its fundamentals in terms of investing from a beginner’s point of view.
Basic Info on Crypto
Cryptocurrency is a digital payment that does not rely on banks for transaction verification. It’s a peer-to-peer system that lets anyone send and receive money from anyone else. Cryptocurrency payments are only digital entries in an online database identifying individual transactions, not real money that can be carried around and exchanged. Your cryptocurrency transactions are recorded in a public ledger. Cryptocurrency is stored in digital wallets.
The term “cryptocurrency” stems from transactions being verified through encryption. As a result, storing and transferring cryptocurrency data between wallets and public ledgers necessitates sophisticated scripting. The purpose of encryption is to assure security and safety. Bitcoin was the first cryptocurrency, and it is still the most well-known today. It was developed in 2009 and is still the most prominent today. The temptation to trade for profit is at the root of much interest in cryptocurrencies, with speculators driving prices sky-high.
How Crypto Has Changed
The bitcoin market has changed dramatically in the previous 18 months. It has grown quicker than ever before, yet its future has never been more uncertain.
With so much free time and so few things to do with it, many people have turned to crypto trading for the first time during the pandemic. The viral trail of Reddit posts, where talk of “stonks” and “diamond hands” spurred hundreds to collectively inflate the price of certain commodities “to the moon,” attracted everyday customers, many of whom had no idea what the blockchain was.
This spawned a new category of “meme stocks,” reviving dormant companies like GameStop and AMC while rocking the market. All of this points to one significant tendency. Cryptocurrency, which was initially only understood by a small group of anti-establishment investors, is becoming a household word. According to analysts, the global cryptocurrency industry will more than triple in value by 2030, reaching roughly $5 billion. Whether they want it, investors, businesses, and brands can’t ignore the growing wave of crypto for long.
Cryptography, on the other hand, appears to be riddled with contradictions. Investors support regulation, but they are concerned about many of the consequences it will have. They’re environmentally sensitive, yet cryptocurrency has a significant carbon footprint. Understanding overall consumer mood – and projecting consumer behavior – around a highly uncertain future of cryptocurrencies requires delving into these intricacies.
The benefits of cryptocurrencies have just begun to draw institutions. Traditional finance is scrambling to meet the rising demand, such as the U.S. Bank’s recent launch of a bitcoin custody service, which allows hedge funds to invest in the digital currency.
While increased institutional investment means more potential for average investors, it also challenges the ability of digital currencies to operate outside of traditional finance. The paradox begins here. Over the last few years, the infusion of institutional capital into cryptocurrencies has already started to shift the market’s power structure. Thirteen years ago, cryptocurrency users were attracted by a desire to shake up the elitist, institutionalized world of finance, to provide a universally accessible way to move money and pay for products and services, independent of personal circumstances.
Unlike traditional banks, you didn’t even need an address; all you needed was an internet connection. In theory, cryptocurrency relies on the collective activities of everyday users to self-regulate; they secure and update the transaction log – the blockchain – and the process allows anyone with a computer to mine coins.
What the future of Bitcoin looks like Like
Because Bitcoin is the most valuable cryptocurrency in terms of market capitalization, it is an excellent forecast of the crypto market. The market as a whole tends to follow its lead.
In 2021, the price of bitcoin embarked on a rollercoaster swing, reaching a new all-time high of $68,000 in November. This record high was reached after previous highs of over $60,000 in April and October; then a summer fall to less than $30,000 in July. Because of this volatility, experts advise limiting your cryptocurrency investments to less than 5% of your whole portfolio initially.
But how far can Bitcoin rise? According to many experts, it’s simply a question of time until Bitcoin reaches $100,000. Bitcoin’s past may provide some clues about what to expect in the future, according to Kiana Danial, author of “Cryptocurrency Investing for Dummies.”
Bitcoin’s price, according to Danial, has witnessed multiple big jumps followed by pullbacks since 2011. “I expect Bitcoin to have short-term volatility and long-term growth.”
We might speculate (and many wills) on the value bitcoin will have for investors in the coming months and years, but the reality is that it’s still a young and speculative investment with only a few years of history to go on. Nobody knows what a specific expert thinks or says. Only invest what you’re willing to risk for long-term wealth creation, and stick to more traditional investments.
“Would you be okay if you awoke one morning to discover that crypto had been banned by developed countries and had lost all value?” According to Frederick Stanfield, a licensed financial adviser with Lifewater Wealth Management in Atlanta, Georgia,
Keep your cryptocurrency investments to a bare minimum and never put them ahead of other financial goals such as retirement savings and debt reduction.
If you haven’t used cryptocurrencies, NFTs, platforms, exchanges, blockchains, or wallets, it’s difficult to grasp them thoroughly. Bankman-Fried recommends creating a few different accounts with tiny amounts of money at various locations for testing purposes. Then, please take advantage of all of the accounts’ capabilities to taste what it’s like holding multiple assets, buying and selling, and even sending a blockchain transaction.
This will teach you a lot more about how the space works in the end than any amount of talking or reading can. Experts predict that cryptocurrencies and other digital assets will have a bright future because they will revolutionize the financial landscape by bringing financial services to people who have previously been excluded.
“We’ve seen grassroots initiatives with advanced cryptocurrencies,” said Cleve Mesidor, the Blockchain Foundation executive director. “That’s why you’ve seen populations that have been left out of the traditional financial system able to engage.”
According to Pew Research Center, Asian, Black, and Hispanic persons are more likely to have invested in or traded cryptocurrency. “Those left out have embraced this new currency,” Mesidor explained. She also noted that the turmoil in Ukraine has demonstrated how bitcoin may be a valuable tool for war-torn victims who are unable to access money held in domestic institutions but can obtain cryptocurrency.
Now let’s Talk about Platinum.
Precious stones and metals have always captivated Indians. On the other hand, other metals have failed to catch the public’s interest beyond personal use, but gold has risen in appeal as an independent asset class over the years.
Platinum is in the same boat as gold, as it is more susceptible to the increasing industrial cycle. Despite its restricted availability and rarity due to high power costs and a sophisticated extraction procedure, the pricey metal is still trying to affect the financial world.
Market analysts forecast abnormally large movement in the grey-white metal prices shortly as the trend expands to the rest of the world, as platinum jewellery catches appeal in the West. They believe it deserves a tactical, if not strategic, allocation in an individual’s portfolio and ranks it as the second-best investment bet among various metals.
For starters, platinum prices in India, like gold, are computed by adding import duties, octroi, and other local taxes to global expenses. Costs, particularly the rupee-to-dollar exchange rate, are highly susceptible to global swings. As a result, even if global platinum prices rise while all other factors remain constant, a rise in the value of the Indian rupee against the U.S. dollar may result in platinum prices being unchanged domestically.
The massive supply-demand mismatch is what makes Platinum a viable investment option. Platinum production is only three million ounces worldwide, less than a tenth of that of the yellow metal. There are four ways to invest in the global platinum market.
How To Invest In Platinum
Platinum bullion, coins, jewellery, and futures trading on a commodity market are your only options in India. Bullion and coins are available from various vendors, including banks and authorized dealers. The metal, which has a purity of 99.95 per cent, is typically sold in quantities ranging from one gram to ten troy ounces.
“These are collectable pieces of art. Hence they are sold at a higher price than the spot price.” Furthermore, coins are difficult to counterfeit and require a little examination to establish their validity,” adds Ashish Kapur, CEO of the Delhi-based broking firm Invest Shoppe.
You can also invest in Platinum by purchasing Exchange Traded Funds (ETFs) and Notes (ETNs). Although this product is not now accessible in India, it is always available on the foreign market. As per the rules of RBI, an Indian investor can invest up to $200,000 in foreign assets. ETFs have the upper hand in making your metal without storing physical coins or bars.
ETNs, on the other hand, are issued by banks and are valued based on an index of numerous ETFs. “ETNs frequently track the performance of a set of platinum futures contracts.” “It’s similar to a bond, except it doesn’t pay interest,” Kapur adds. Apart from pricing risks, currency risk, particularly rupee appreciation risk, occurs in such investments.
Is metal worth it, given the price trend of Platinum?
Platinum has a far shorter investing history than gold or silver, which have commercial roots dating back to ancient civilizations. However, it has already proven to be a valuable addition to the portfolio of a wise investor. However, despite a dramatic rally between 1999 and 2008, and a fast recovery following the Great Recession, the commodity has gradually lost value since 2012.
Where is a troy ounce of silver-headed next after bottoming out at $558 in March 2020 and rising to trade at roughly $840 in June? Will platinum prices continue to soar, surpassing past highs, or will they plummet, setting new record lows? Back in the day, Platinum was thought to be an excellent long-term investment for individuals who could weather short-term volatility and recognize the metal’s precious underpinnings along with its expanding industrial demand. Is Platinum, however, a suitable investment right now?
It’s crucial to know how Platinum has performed in the past better to understand the platinum price outlook in the future. Platinum’s strong performance from the late 1990s until the notorious financial crisis of 2008 was primarily due to the metal’s limited supply, a wide range of applications, and effective demand stimulation. The gold price hit a new record high when it traded at $2,273 per troy ounce in March 2008. (t oz).
However, when the economy worsened, it lost nearly 65% of its value in months, falling to $774/t oz in November 2008.
Unlike many other financial assets, gold immediately resumed its upward trend, finally reaching a new high of $1,874/t ounce in August 2011. Platinum began to plummet dramatically, with many price changes along the way. By January 2016, the gold was trading at $820 a tonne ounce. The commodity regained some of its losses during the next few months, peaking at $1,158/t oz in the summer of 2016. Platinum fell to a 10-year low of $777.30/t oz in August 2018, only to rise to $1,024.80 in January 2020.
However, the positive impetus was short-lived, and 2020 has been anything but a good year for the platinum price. The glittering metal had its worst quarterly performance since 2008 in the first three months of this year, after the Covid-19 outbreak hit the world, halting industrial output and stifling global economic growth.
Many investors rushed to dump precious metals in exchange for cash, fearful of another market disaster. The prospect of a drop in physical demand from the automobile sector fueled the fire, with platinum prices plummeting from $1,016/t oz on February 19 to below $600/t oz on March 19. When the world’s largest producers went on strike in South Africa at the end of March, platinum price news turned optimistic, resulting in a short-term supply easing.
How much Platinum should I include in my portfolio?
Platinum has grown in prominence as an investment option in recent years, but portfolio managers recommend keeping it to no more than 3-5 per cent of your overall portfolio. Platinum jewellery should also not be considered an investment. Platinum jewellery has a lower resale value because it is not 100 per cent pure, and the manufacturing costs are also reasonably high. “As an investment opportunity, Platinum is second only to gold, followed by diamonds and silver.
As there is a very high demand and supply mismatch globally concentrated in a few countries such as South Africa, Russia, and Canada, platinum prices are projected to rise if demand grows slightly. Platinum is expected to perform well provided the global economic recovery continues and a systemic sovereign crisis is averted, according to Devendra Nevgi, founder and principal partner of Delta Global Partners.
“In the short run, global risk aversion and the evolving circumstances regarding the debt crisis will provide direction to platinum prices,” he predicts. The autocatalyst industry accounts for around half of the demand for grey-white metal, with the rest coming from sectors such as chemicals, electrical, glass, petroleum, and jewellery. Experts believe that the strong demand for automobiles in China and India bodes well for Platinum.
The Final Verdict! Which one is a Better Investment then?
Like each coin has two sides, investing also has both the possibility of returns or losses. Both crypto and Platinum have high volatile rates and are something that experts count on. Yes, the crypto market can be helpful to people who want to make short-term investments and want their money to grow or those who intraday with crypto, too, as they do with stocks. But when it comes to long-term investing, like five years down the road, there is no certainty. A resource’s price can grow tenfold if the demand is high and its availability is more petite.
We can look back at history as to why and how bitcoin’s demand is high. A certain number of bitcoin is available in the market, and no further mining is done for that cryptocurrency. People have to identify the crypto and do thorough research.
Before investing in crypto, one thing is for sure: the market has a lot of potentials and will act as a game-changer in the future. And so is the same with Platinum, so if you are a person who wants to build their portfolio and look at the long term, then start slow and keep both the assets in a certain amount so that later you don’t feel the FOMO(fear of missing out) on something that was well within your reach. Still, you didn’t invest thinking if it would be correct or not for you. So what are you waiting for? Just do your research, trust your instincts and board the money train by investing in the commodity of your choice.