Crypto craze: Bitcoin and Ethereum least risky to invest in, says expert

The cryptocurrency has hit a $2 trillion market cap once again and the big question everyone is asking is how to wade through this crypto universe and they also want to know about the volatility that cryptocurrencies like Bitcoin and Ethereum have seen over the years. Investors might also like to know, which are good ones to buy, which ones one should stay away from.

Therefore, the aim is to try and understand how to navigate through this volatility and understand the risks involved before making any investment decisions.

Between July 2020, and January 2021, Bitcoin has seen a meteoric rise all the way to $40,500 -- a rise of 340 percent in just five months, following which had hit a high of $63,500 in April of 2021 and that is where the downfall began. So, between April of 2021, and July, the bitcoin price halved, and now it's back to above $47,000.

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Not just Bitcoin, massive moves come across a whole host of cryptos -- from Cardano, to Solana to Binance, to Dogecoin. Dogecoin has seen an 8,000 percent performance year-to-date between last year and now.

To discuss where the cryptocurrencies would go from here, CNBC-TV18’s spoke to Siddharth Menonilind, COO, WazirX; and Sidharth Sogani, founder and CEO, CREBACO.

Milind said, "It is a growing market, just last year, probably in in August this time, we have much below $400 billion market, and even back then I would have not even thought about, you know, where it can go. But it is good to see a healthy market that's been growing, we reached about some $2.5 trillion and then briefly saw $1.5 trillion, and there has been a good push back now at $2 trillion."

“When you think about the whole bull market that we are talking about one thing is very different this time, is that we see a lot more institutional participation, right. And that has changed a lot of things fundamentally, for a lot more people; probably to hedge their risk, in terms of their treasury they want to take a position in terms of hedging against inflation, or this could also be an investment for them,” said Menon.

He added that because of that trend, it is just getting started and when one even thinks about not just the entire commodity market, but just gold, which is somewhere around $11 trillion, there's a lot more room for the entire crypto industry, which is just getting started.

“So it's very difficult to put a number there, but definitely, I hope this is going to be another surprise move for all of us, you know, a year from here.”

Sogani said, "The least risky would be Bitcoin and Ethereum because, see, it's similar to how we see stocks in the stock market something, which has a smaller market cap is more prone to more volatility and Bitcoin has a $875 billion market cap, Ethereum is around $375 billion. Both these currencies have been there since almost 10 years. So they have a good track record and are the safest."

“If somebody is charting new, these are the two coins, which you should start off with. And then slowly diversify your portfolio like how we do large caps, midcaps, blue chips, and stuff like that," said Sogani.

If one were to look at the Ethereum graph, it's gone from $160 in 2020, to now at $3,051 that is a 20x jump.

Menon said, “Any new market comes with its own risk, so we have to understand that whether it's stock market, whether it's crypto market, it's not different. It comes with a lot of volatility and takes time for it to be mature."

"Having said that, when you when you look at the fundamentals, or the value of what Ethereum or any other projects does, you understand what we are shaping towards here -- we are trying to build this whole, you know, life on the internet, we are spending more time on the internet. So, it's all about that. So this is more of a native internet, token, native internet applications," Menon explained.

He further said, “Ethereum plays a very important role in terms of helping people build on - decentralised application and that by itself is a big, really big thing. From an investor point of view, we want them to think about what's their long-term vision is and once they understand the value it can create from a long-term perspective, I think it's still not that late, personally when I think about it.”

However, if you are into just trading it out and buying and selling, maybe you should consider all your risk there," Menon cautioned.