Kunal Sawhney graduated from Birla Institute of Technology with a Bachelor of Administration. Later he earned a Master’s degree in Business Administration and Accounting from the University of Technology, Sidney. Kunal Sawhney started his career as Vice President, Sales in FatProphets. In 2013 he held the position of Head Business Development at City Index Australia Pty Ltd. A year later, Kunal assumed the role of CEO at Kalkine, a position he holds to this day.
One of the reasons for our conversation today is the cryptocurrency research that you recently launched. What exactly is the goal of this project?
If we are talking about cryptocurrencies, this is just the road not the destination or goal yet. That’s the central team that underlines research in the space. First, cryptocurrencies are not just an emerging investment class, they are also a very new emerging technology. Our research is primarily focused on making sense of different projects in the space.
Cryptocurrencies are just the road not the destination or goal yet.
For many, all the cryptocurrencies, for example, BTC, ETH, Dogecoin and Bittorrent fall under the same umbrella. But the reality is they don`t. Bitcoin was the first blockchain-based digital currency. In fact, instead of calling them cryptocurrencies it is better to call them blockchain-based digital currencies. Bitcoin was launched to compete with Fiat currencies like the US dollar. Bitcoin can be transferred without the need of any intermediary like banks, which makes remittances cheaper and quicker at least in theory.
Ether, the second most powerful crypto is a native token of a specific project. Ether is a blockchain that works and allows developers to build decentralized solutions. Ether is used within this project as a token to pay the network fee and that is it. Ether, as far as we know it today, isn’t competing with Fiat currencies.
Similarly, all the cryptos like Dogecoin are project specific tokens and second there is a lot of confusion, misunderstanding, misinformation and misplaced assumptions about cryptocurrencies. And our main aim is to educate people. For some, these are assets like digital gold, for some these are the new age store of value like Fiat currencies and for some these are like stocks literal exchanges.
Kalkine`s crypto currency research offers extensive technical research using technical parameters such as price action, trends, support to resistance levels, candlestick patterns, volumes etc. Opportunities are assessed in the light of predefined risk-reward scenarios for a particular crypto asset. The project focuses on reading out at least some confusion around assets. Besides, as stated earlier a few cryptocurrency projects, may be promising. For example, there is a blockchain project in the field of music streaming – Audius. It, in origins, is reading out intermediaries from the entertainment industry by linking the content creator directly with the consumer. And our research lets readers understand what different projects are and evaluate a particular project’s token.
You mentioned assets. But what are the risks associated with this asset class?
As stated earlier, cryptocurrencies are emerging likely in its embryonic stage. Now that you have specifically asked about risks – when talking about cryptos as an asset class, let’s look at this aspect – what is an asset, broadly speaking.
An asset can either appreciate in value for example stocks or gold or it can appreciate in value for example, a car or a smartphone.
Currently, cryptocurrencies are being considered as far more, even termed as digital gold. Gold has been with us for ages. In one of his comments Chair of Securities and Exchange Commission Gary Gensler talked about how people have been speculating on the value of gold. This comment was a part of his long speech on the future of cryptocurrencies.The risk factor lies with gold as well as listed stocks being blue chips or penny stocks. Risk is in fact with every asset that does not promise fixed returns like certificates of deposit. This risk is a little more in cryptocurrencies because of a lack of understanding.
Here, we have to look at two different types of investors in cryptocurrencies. The first are seasoned investors that usually know when to park money and book profits. They do it through stocks. Now, cryptocurrencies like BTC. The second are amateur retail investors who are more vulnerable to shocks. These investors may not know the underlined blockchain project and may be just betting on random crypto because an influential billionaire has tweeted about it.
This class of investors lacks the expertise when it comes to profit booking. To make matters worse, the so-called “hold on to their life” theory preaches holding a crypto asset for life regardless of how the market is behaving. So yeah, so I’ve just outlined a number of risks for you.
How do you see the future of blockchain technology? What are the trends based on your research data?
Blockchain is not BTC and BTC isn’t blockchain. Blockchain is so much more apart from digital currencies. Blockchain is about distributed ledger and decentralization. Decentralization of power can be good – it is like a boss delegating some decision-making to front line managers which speeds up work. In blockchain, we might find a world where tech-giants do not hold too much power. Take this, for example, in any social media platform – the users’ data is owned by a centralized entity that runs the platform and these are tech-giants with high market-caps and often no allowed skilled competitors.
Blockchain may be the answer.
This is because it relies on peer-to-peer architecture where users of the platform make important decisions. The governance of the platform lies in the hands of users. These users process any transaction on the network. Like in BTC, miners enable the recording of transactions. By this count, blockchain seems promising. Maybe central banks are already discussing launching their digital currencies or CBDCs. In future, maybe some of these CBDCs will be underpaint by blockchain to make transactions quicker.
So, we all know that trading in stock markets can be tricky..What is the secret for successful business?
Everyone has their own secrets. Someone like Elon Musk might want to go for an emerging asset class like cryptocurrency. Then, someone like Warren Buffet may consider these as rat-poison and instead go for safer S&P 500 stocks. But the best approach is always to understand what we are dealing with.
For example, suppose someone is seeking an electrical way or other clean energy stocks. In that case, they should read how the industry is shaping up the pace of replacing conventional gasoline cars with EVs and so on. Fundamentals like revenue growth, market share, mergers and acquisitions play a very important role. Stock investors prefer long-term horizons over short-term profits.
The global market talked about an increase much before TSLA stock entered a bull run in 2020. Those who picked the store when it was priced low were rewarded long-term. Second, there can be many temptations in this market. For example, a stock like GameStop may serve on the back of some concerted effort by a group of retail investors but the same stock can also fall sharply.
Last and most important is profit booking. One can set some targets and when the target is attained it may be time to liquidate and park funds in other emerging assets with solid fundamentals.
Do you think that digital currencies are the future and why should people start using them at all?
So, the question is best left unanswered for now but we expect some dust to settle in 2022. El Salvador has adopted BTC as legal tender and in some time it will be if the intended benefits of making cross-border remittances cheaper have been achieved or not. Presently, there are multiple powerful authorities like Central Banks and Stock Market Regulators that are still unclear if endorsing cryptocurrencies.
Politicians and political parties are not on the same page. After this, the volatility factor that can lead to sharp price – gain and loss in a very short time. So, for now there is a lot of dust on whether blockchain-based digital currencies are like stocks or if they are like gold or any other precious commodity or if they are the future store of value like USD or GBP.
In 2022, the vision may become somewhat transparent.
Speculation that is currently leading to wild price volatility may come a bit as more people become aware of cryptocurrency projects and they may make more informed decisions.
So, what are the positive and negative aspects of cryptocurrency? I assume you know them well.
Blockchain technology aside, the other positive aspect of cryptos is that they preserved investors’ spirits during the rough pandemic phase. In the early days of the pandemic, the global stock market plumbed sharply but the resurgence where most indexes reached record peaks in 2021 has been fenomenal. It ows, in part, to the enthusiastic retail investors that supported all asset classes from stocks to cryptocurrencies.
At the time of an economic slowdown triggered by the unexpected pandemic, retail investors held their nerves and infused the much needed liquidity in the markets. The kind of noise cryptocurrencies and other related things like non-fungible tokens (NFTs) made is one of the reasons why retail investors bet heavily on these assets. Second, each cryptocurrency is related to a specific blockchain pivot project. For example, AXS is the crypto used in the Axie Infinity project – a blockchain-based game with NFT features. Maybe this project can replace conventional gaming just like EVs are replacing fossil fuel cars and if this does happen, the particular blockchain project and its linked native token can be a positive thing.
Negatives are scented on the price volatility and the stands of regulators because cryptocurrencies can work without regulators, checks and balances may not present. This may make them vulnerable to manipulation. Cryptos have become a speculative asset where sentiments are playing a significant role and hence, there is so much volatility. Fundamentals like revenue growth, market share are missing as of now. There are still talks about other countries banning cryptos like China and thus far does not board well for any asset class.
There is something I am curious about. How can we find the crypto data which is best for our business?
It may be a good reference to the official website of any particular cryptocurrency. A price-tracking website like CoinMarketCap, CryptocurrencyExchange, Coinbase are also amongst the reliable platforms to find data but lapses and risks lie everywhere. For example, a few weeks earlier CoinMarketCap erred in indexing the price of one crypto ARC Governance which led to price surging by some 2 million percent in just a few hours.
Therefore, it is important to look at multiple places to collect data and then reach any conclusion. Besides, a few crypto talkers may be very speculative in their opinion and it’s better to gather more information on any subject before reaching a conclusion.
I would like you to talk now a little bit more about the company. Can you tell me more about Kalkine? What is the specific here?
So, Kalkine is an equity research firm and a media house. We provide our readers with knowledge on multiple asset classes ranging from traditional investment options to listed stocks and now crypto assets. Knowledge helps making an informed decision which lies at the heart of prudent investment strategy. We enable people to make informed decisions and how to deploy strategies that suit their income levels and risk-appetite. We don’t recommend any specific products but we make vital information available for investors.
I saw on your website that Kalkine offers a lot of products. Which one was the first that the company has created and what was its purpose?
The first one was the Kalkine Investor Report which was primarily dwelling into the bleach of companies – the bigger companies listed.
You have been Kalkine`s CEO for almost 8 years now. What was the biggest challenge for you and for the company throughout all these years and how did you manage the ups and downs?
The pandemic was, by far, one of the biggest challenges that the company faced. It derailed a few things but then we got back on track due to the business continuity plan and thanks to the resilience of our team. Challenges, I believe, will always be a part of our ecosystem in this competitive world. So, yes, I would say that was a challenge but we came out of it really strongly.
So, that was actually one of the questions – How is the pandemic reflecting on your business? What is the hardest part in this industry?
I think the limitation of this industry’s type is the volatility and market scenario that bring some hard things alongside. For instance, it can be difficult to pick between two options – capital gains and dividend income.
Capital gains means buying a particular stock and then selling it when the price appreciates. Whereas, dividend income comes only when the investors hold the stock in the portfolio and don’t fall for the lure of any capital gain.
Aside from this, knowing the opportune time to liquidate any stock is tricky.
But if the investor reads what is going on in the sector in which the company operates, it can give clues on when is the right time to pick or sell the stock.
So, I think, looking at volatility, looking at different market scenarios, yes, that can be one of hard things.
And one more question – with what kind of clients do you work?
So, in general we work with retail clients and high-liquid individuals. That’s the kind of clients we generally work with.