“It was a disturbing event. I bought Luna at $73 and got out at 24 cents,” he said. “I had a small investment, but as someone who believed in ‘smart contract’ cryptos, it was painful to watch the event unfold.”
After the plunge, Nadar sold some of the altcoins he held—Avalanche, Near and Algorand—and moved money to Bitcoin and Ethereum for some time.
“Now I am doing a deep dive into the tokens to understand their technology, viability, and most importantly, the actual value that they offer. Once they are trading at lower prices, I will buy them back,” he said.
Investors like Nadar, already reeling from the imposition of a high tax rate on crypto income by the government, are rethinking investments and rejigging portfolios as bears continue to pull down the market.
Most investors have seen their portfolios sink deep into the red as carnage continues in the crypto market due to a confluence of factors including inflation, rising interest rates, the Ukraine-Russia conflict, volatility in stable coins, and the recent crash of the Terra ecosystem.
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Terra dropped to $0.0002996 on Sunday after touching an all-time high of $119 in the last 12 months, wiping out investments worth crores from Indian crypto investors’ pockets.
“In every bear market, we have seen that Q2 is volatile, but market conditions usually improve from June onwards,” said Gaurav Dahake, founder and CEO, BitBNS.
New Delhi-based Dhruv Sharma, a 26-year-old Supreme Court lawyer, said his portfolio is in the red despite having started four years ago because he continued to buy more cryptos in the past year when digital assets reached new all-time highs.
Now he is moving out of altcoins and buying Bitcoin and Ethereum at lower prices to stabilise his portfolio. “I am trying to do a bit of dollar cost averaging to lower the price of my crypto investments. But my philosophy in terms of risky cryptos like Solana, Matic, and Shiba Inu is that even if you lose everything, it’s OK. After all, I am playing the high-risk, high-reward game,” said Sharma.
The recent Luna crash has scared a lot of new crypto investors who aren’t used to the vagaries and volatility of the crypto market, and many are wondering if it’s an asset category they should pursue.
“After the Luna crash, a lot of small investors are really cautious about their current holdings and are wondering if it’s even safe to invest in crypto,” said Chahal Verma, a Gurgaon-based investor and social media influencer. “But now everyone is realising how volatile the crypto market really is, and it just isn’t 50x-100x everyday, and you need to be extremely cautious before parking your money in something by making sure it’s safe and fits all the criteria of utility, community, decentralisation, etc.”
Experts say the problem is that many Indian investors had low or nil investment in stable cryptocurrencies such as Bitcoin and Ethereum as prices of these were already high and bought altcoins without taking the associated risks into consideration.
“Throughout 2021, I kept shouting at the top of my voice that you should keep a large portion of your crypto holdings in Bitcoin or Ethereum. But no one listens to sane voices in a bull run, especially the newcomers. People wanted and were getting abnormal returns for most of last year,” said popular crypto influencer Vishal Gupta.
Despite the crash-and-burn story repeating itself with multiple tokens over the years, Indian crypto investors have continued to chase the shiny new thing on the market, and as a result, Indian exchanges have been adding coins at a rapid pace in the past year to meet the needs of those seeking high returns.
“Last year, a token backed by billionaire Mark Cuban—Iron Titanium—tanked to zero in a short period of time. The token had touched $52 at one time. Once the trust of the investors is broken, we have seen tokens enter into a death spiral. Investors should realise that cryptos have much shorter cycles than equities,” said Nadar.
On Sunday, Indian exchanges were recording lower volumes. At 3.15 pm on Coinmarketcap on May 15, Wazir X volumes were down 22.47%, while those on CoinDCX had fallen 23.83%, BitBNS by 1.77% and Unocoin by 62.12%.
Adding fuel to the flame were social media influencers, WhatsApp groups, and telegram channels that offered dubious advice as Indian investors were looking to make informed choices during the meltdown, said experts.
“This is a post-Covid phenomenon, and often these influence Indian crypto investors greatly,” said Dahake of BitBNS.
Despite the carnage, a few Indians were still open to participating in the high-risk game, driven by the thirst for immediate returns. As Do Kwan, the charismatic founder of Terra, launched another revival plan, Luna prices spiked a bit for some time. “Some Indian investors who also trade on international exchanges that still haven’t delisted Luna couldn’t resist the opportunity to trade in Luna again,” said Gupta. “It’s an addiction.”
