UK's Financial Conduct Authority (FCA) on Monday said investments in cryptocurrencies such as bitcoins come with "very high risks." If consumers invest in these types of products, FCA said, they should be prepared to lose all their money.
The statement from FCA comes amid wild volatility in the Bitcoin market.
Bitcoin has plunged as much as 21 percent over the last two days, its biggest two-day decline since March 2020.
Given that, investors must be having second thoughts on whether they should invest in Bitcoins.
According to Nischal Shetty, CEO, WazirX, Bitcoin’s price went up from $18,000 to over $40,000 within one month. That’s over 100 percent price increase in such a short span of time.
"Bitcoin’s price dropping from $40,000 is a healthy correction and it will help to build a more solid foundation for price appreciation," he believes.
Also read: How to invest in bitcoins in India?
However, Shetty adds, while the market is rebounding, people should trade with caution as Bitcoin is testing its top levels. As of now, it’s a high risk, high return investment option. Only time will tell how solid Bitcoin's current price levels are in terms of price support.
As per Sathvik Vishwanath, CEO and co-founder of Unocoin, bitcoin's biggest use case is fast and free transfer of value and for this to happen, it is important that bitcoin finds out its own value through speculations.
To start with, Vishwanath tells bitcoin is still a nascent technology and it could just fail for whatever technical reason.
"Its value is extremely volatile and it may wash away the entire investment and there is no obligation for anyone to protect one’s investment or buy his/her bitcoin. Also, India has a history of restricting or banning new technologies before their legitimate usage becomes fully evident in other developed countries. So in other words, there could be a time where the bitcoin holdings cannot be liquidated", Vishwanath warns.
Also read: How bitcoin investments can be taxed in India?
Ashish Singhal, CEO and co-founder of CoinSwitch Kuber, however, feels that it may still make sense for long-term investors to hold on to bitcoins.
"While there may have been drops in the market but the prices have shown an upward trend in the 6-month and 3-month window. So, bitcoins should always be looked at from a long-term perspective," Singhal opines.
Sumit Gupta, CEO and co-founder of CoinDCX also feels that the current correction is the healthy consolidation being witnessed in the BTC market.
Disclaimer: The views and investment tips expressed by investment experts on CNBCTV18.com are their own and not that of the website or its management. CNBCTV18.com advises users to check with certified experts before taking any investment decisions.
