Bitcoin is either the best or worst asset class every year. ZebPay CEO Rahul Pagidipati explains why

Bitcoin has been either the best performing asset class or one of the worst in any given year, offering investors outsized returns at the cost of extreme volatility. That binary performance is not a flaw but a defining feature of the cryptocurrency, according to ZebPay CEO Rahul Pagidipati.

As Indian family offices, high-net-worth investors and fund houses increasingly seek exposure to digital assets, Pagidipati argues that Bitcoin is moving beyond its image as a trading instrument. He sees it evolving into the next store-of-value asset after gold, real estate and stocks, though he cautions investors against putting all their money into it.

Edited excerpts from a chat on the sidelines of India Blockchain Week:

Has the pace of crypto adoption in India increased over the past couple of years?

Rahul Pagidipati: Definitely. I wouldn’t say the trader community has increased, but the investor community certainly has. We now see high-net-worth individuals, family offices and fund houses asking detailed questions about how they can hedge and participate in crypto—not just in their trading portfolios, but also on their balance sheets.

They are trying to understand the governance framework around crypto. They know that we have been doing this for 12 years. I have customers who initially came in asking for Bitcoin and now ask whether there is another asset with similar strength, utility, governance and infrastructure that can support artificial intelligence, real-world assets or payment systems.

People also want to understand stablecoins and whether their use cases are real. Initially, stablecoins were mainly used to gain access to Bitcoin. Today, they can be used to store value, facilitate cross-border transactions and provide exposure to digital assets within regulatory limits.

It is not that customers do not understand crypto. They want to know how they can use it and what level of exposure is appropriate.

What are investors looking to hedge against: equities, inflation or something else?

Rahul Pagidipati: Equities and inflation. Equity returns are still decent, at around 10% to 12% for many investors, but the cost of everything is also rising. Bitcoin has historically performed better than inflation, although it has had significant ups and downs.

How do you see Bitcoin’s role evolving in India?

Rahul Pagidipati: India’s store-of-value assets have traditionally been gold and real estate. For people older than my generation, those were considered safe assets. Stocks were viewed as risky. Around my generation, stocks began to be seen as a safer asset, particularly when held through mutual funds.

The progression has been from gold to real estate and then stocks. I believe the next major store-of-value asset could be Bitcoin.

For my grandparents, the answer would have been gold. For my parents, it would have been real estate. For me, it is stocks. For my son, it could be digital assets. Each generation thinks about store-of-value assets differently.

This is also a question of perspective. Indians who have travelled abroad and experienced other markets are more open to owning global assets. Those who return to India influence the people and businesses around them.

Over the next 10 to 20 years, Bitcoin could become a more widely accepted asset. It is similar to the way people viewed stocks in the 1990s. They considered stocks risky. They were riskier, but perhaps not as risky as people believed.

Do you think Bitcoin can outperform stocks over the next 15 to 20 years?

Rahul Pagidipati: Yes. I do not just think so—I know so.

Real estate is probably riskier than gold but offers higher returns. Stocks are riskier than real estate but offer higher returns. Bitcoin is riskier than stocks but also offers higher returns. The question is how you measure risk and reward.

The Sharpe ratio is one way to evaluate risk-adjusted returns. Bitcoin has an exceptionally strong risk-to-reward ratio. It looks risky, but it is volatile. It took me many years to understand that volatility is not the same as risk. Many people see volatility as a problem. It is actually a feature, not a bug.

Most people do not want that kind of volatility. But people who do want it are often traders. My view is that ZebPay should focus much more on long-term investing. If you buy small amounts and invest over time, you may do better. If you trade, you often lose because you buy high and sell low.

When we compare Bitcoin’s performance with other asset classes in the long run, what interesting data do you see?

Rahul Pagidipati: If you look at all asset classes such as real estate, small caps, emerging markets, AAA bonds, stocks and cash across a time horizon of 16 years, Bitcoin is either in first place or last place. It is rarely in between.

People imagine that the perfect investment should simply keep going up. But that does not exist. Everyone would like 25% annualised returns without drawdowns, but high returns come with volatility.

Bitcoin has been the best performing investment by far over this period. That also means it goes up and down sharply. You have to decide whether you want very high returns with significant downside. If you size the position properly, it can still be a valuable investment.

If you can handle the volatility, Bitcoin can be a strong investment.

The best time to buy is not after a major rise. It is when the asset is down. That does not mean it will rise forever. It means that after a major decline, it could potentially outperform over the next two or three years before falling back to the bottom of the rankings again.

You should not put all your money into Bitcoin. It is too risky for that. But people could consider allocating 1% to 10% of their wealth to it, depending on their risk appetite.

You also compared Bitcoin with cash. How should investors view the two?

Rahul Pagidipati: Cash can also be either a great investment or a terrible one, depending on the cycle. It is almost the opposite of Bitcoin. In most cases where Bitcoin is the best performing asset class, cash is among the worst while when cash does well Bitcoin falters.

Data shows that cash is almost anti-Bitcoin. Bitcoin tends to perform best when liquidity and risk appetite are strong, while cash performs best during periods of stress. The two assets represent opposite ends of the investment spectrum. That is why asset allocation and position sizing are so important.

Just as someone might consider allocating 1% to 10% of their net worth to Bitcoin, they could also hold 1% to 10% in cash. They represent very different ends of the investment spectrum.

Many young Indians are investing almost all their savings in crypto. What would you tell them?

Rahul Pagidipati: Younger people are generally more willing to take risks. Older people are more concerned about drawdowns and prefer to keep a larger portion of their wealth in cash or bonds.

The problem is that young investors can also end up gambling. If they buy at the peak, they can lose 80% of their money. If they buy at the trough, they could potentially multiply their investment several times.

I believe the older you become, the less crypto you should own because it is a higher risk asset. It is fine for younger people to have higher exposure, but that exposure should still be part of a broader asset-allocation strategy.

Is crypto adoption still concentrated among people in their 20s and 30s?

Rahul Pagidipati: Without a doubt, younger people have a higher allocation. But Bitcoin is gaining strength relative to other cryptocurrencies because it has been around for a long time.

Many young people invest in meme coins and smaller assets. However, Bitcoin is increasingly being viewed as a store of value, particularly after the launch of Bitcoin exchange-traded funds and greater institutional participation.

People in their 40s and 60s are now also investing in Bitcoin. When I speak to high-net-worth family offices in the US and other parts of the world, they are usually not asking about meme coins. They want to know how much Bitcoin exposure they should have.

They are not going to put all their money into Bitcoin, but they may want 1%, 2% or 5% of their net worth in it.

In India, interest among family offices is also increasing. Some investors are using the Liberalised Remittance Scheme to gain exposure to overseas Bitcoin-related stocks and companies.

Have investors shifted towards alternative assets because equity markets have not performed well over the last two years?

Rahul Pagidipati: These things move in cycles. India is an emerging market and a strong stock market, but when India performs well, another market may be under pressure, and vice versa.

The US stock market has performed well over the last two years, but much of that performance has come from a handful of companies such as Apple, Nvidia and Google. That is the AI trade. It may continue for some time, but it cannot continue forever. When that trade weakens, something else will perform.

Bitcoin is digital gold. It represents scarcity. Gold is the largest asset in the world, with a value of roughly $30 trillion.

The next major asset group is the AI hyperscalers, including Nvidia, Apple, Google, Microsoft, Meta and Amazon. These companies represent abundance through innovation.

In the old world, investors could own gold, representing scarcity, and stocks, representing abundance. In the new world, Bitcoin represents digital scarcity, while Ethereum and other tokenised assets represent digital abundance.

There are therefore four broad ways to look at these investments: gold, stocks, Bitcoin and tokenised assets. Gold and Bitcoin are scarcity and store-of-value plays. Stocks and tokenisation are more closely linked to abundance and risk-taking.

If you want exposure to AI in a decentralised format, one way to look at it is through Ethereum and Ethereum-based tokens.

Why do you see Ethereum as an investment linked to AI?

Rahul Pagidipati: If you want to invest in AI today, you may want to own companies such as OpenAI or Anthropic. But these are closed-source AI companies. You cannot directly own open-source models such as DeepSeek or Kimi K3.

My view is that investing in open-source AI could eventually happen through blockchain assets.

Microsoft built Windows as a closed-source system, with value accruing to Microsoft. Linux, on the other hand, is open source. The challenge with open-source systems is that everyone could build independently without a common standard.

Blockchain could provide the common layer or infrastructure on which different open-source AI systems coordinate. Different countries may want to develop their own AI systems, but they will still need a common framework to interact with each other.

That is why I think something like Ethereum could play the role of Linux in the future. X402 is an example of an agentic payment standard being developed in this direction.

Could stablecoins become part of that infrastructure?

Rahul Pagidipati: Yes, but there are different types of stablecoins. USDC is a US stablecoin, while USDT is more global in its reach.

I think India will eventually have an Indian stablecoin, although it does not exist yet. If India builds one, I believe it will have to be compatible with the Ethereum Virtual Machine. Otherwise, it will not work easily with the rest of the ecosystem.

It is similar to having a common DVD standard. If there is no common standard, a DVD will not play on every system.

If we have an INR-backed stablecoin, can it make the rupee become more stable?

Rahul Pagidipati: I would make a strong bet that an Indian company will eventually create a Circle-like INR-backed stablecoin. It could be one of the country’s large conglomerates or technology companies. That stablecoin could become dominant, but the necessary regulatory framework would first have to be established.