THIS is with reference to the report “Plans for ‘National Crypto Council’ on the anvil” (Feb 26). Every era has its transformative trends. Investing in Apple or Google in the early 2000s, plastic in the 1960s, automobile companies in the 1950s, and oil in the 1930s turned early believers into financial success stories.

While no one can predict the future with certainty, trends such as artificial intelligence (AI), robotics, green energy and cryptocurrency seem to be among the defining opportunities of the current era. The question remains: is crypto truly a smart long-term investment, or is it just another speculative bubble?

Cryptocurrency has followed a rem-arkable trajectory over the last decade. Bitcoin, the first and most well-known digital currency, has grown from being worth mere cents to reaching an all-time high of $109,350 per coin in January this year.

The influx of institutional investors, government discussions about digital currencies, and an expanding ecosystem of blockchain applications have reinforced the perception that crypto is more than just a passing trend.

However, the market is not without its volatility. Since the peak it touched in January, Bitcoin has faced a rather bearish market, sliding 23.4 per cent to an intraday low of $83,740, reflecting broader uncertainty in the space. An amount of well over $800 billion has been wiped out from the crypto market in recent weeks, with Bitcoin falling 15pc in the last month alone, now hovering at $85,600.

In fact, the decline has been attributed to several factors, including concerns over regulatory crackdowns, security breaches, such as the $1.5 billion hack of the Bybit exchange, and unmet expectations of pro-crypto policies under the incumbent White House administration.

Despite these challenges, interest in crypto remains strong, with new investors continuing to enter the market. In India, for example, a growing number of traders from smaller cities are turning to crypt-ocurrency as an alternative income source amidst economic stagnation.

The combined trading volumes of four major Indian exchanges reached close to $1.9 billion in the last quarter of 2024, signalling that despite market fluctu-ations, there is a sustained global appetite for digital assets.

However, with increased adoption comes heightened scrutiny. The Securities and Exchange Commission (SEC) in the United States has intensified its regulatory efforts, filing lawsuits against major crypto exchanges for operating without proper registration.

These legal battles create an uncertain environment for investors, raising concerns about the long-term viability of crypto assets in a heavily regulated financial landscape.

The appeal of crypto as a long-term investment lies in its potential to disrupt traditional finance, but its inherent risks cannot be ignored. Unlike investing in established industries, such as technology or energy, where trends unfold over decades, crypto operates on a much faster, more volatile timeline.

While there are investors who believe that buying and holding onto crypto could lead to significant gains in the future, others warn that a slight failure to recognise when a trend has peaked could lead to massive losses.

Ultimately, the decision to invest in cryptocurrency should be based on thorough research, a clear understanding of the risk, and an individual’s financial goals. While the market offers substantial opportunities, its rapid fluctuations and regulatory uncertainties make it a high-risk investment.

Like any transformative trend, crypto may also have a beginning, a middle, and an end. All those who choose to participate must be prepared for the ride.

Shaigan Babar
Lahore

Published in Dawn, March 7th, 2025