Indian crypto activity has seen a spike in recent weeks with trading volume and user signups witnessing a jump of up to 45% thanks to stable bitcoin price and weakness in the rupee.
Bitcoin prices have been consolidating within an increasingly narrow range even as global equity and bond markets continued to tread the challenging ground with growing evidence of stress developing in sovereign debt and currency markets this week.
On a 30-day basis, bitcoin (BTC) is up around 2%. In the traditional asset markets, S&P 500 in the US is down 3%, while in India, BSE Sensex is down more than 1% on a one-month basis. These markets have seen a decent spike over the past few days. In the forex market, the rupee (INR) slumped close to 3% in September.
Shivam Thakral, chief executive officer, BuyUcoin, said BTC-INR trading pair is getting a lot of traction from seasoned investors on the platform.
“The main reason behind this trend is the falling rupee and underperforming stock market, which is pushing the investors towards digital assets. The high inflation is resulting in rapid depletion of wealth and investors are looking at digital assets like bitcoin as a store value to prevent inflationary damage to their wealth,“ said Thakral.
BuyUcoin has seen a spike of 40-45% in BTC-INR trading pair and a 30% jump in new user signups in the second quarter of the financial year 2023.
Another crypto exchange Unocoin is witnessing a similar trend.
“Compared to August, we have seen September to be a better month. The user registrations per day are up by 20% and volumes are up by 40%,” said Sathvik Vishwanath, co-founder and CEO of Unocoin.
This spike in crypto activity in India has come as a respite for exchanges, who have battling crash in trading volumes due to stiff crypto taxation norms and crypto winter.
In the global markets, bitcoin and ethereum have plunged around 70% from their respective all-time highs.
The bitcoin trading number in India currently varies from its global counterpart. Currently, most risk asset prices and volumes are driven mainly by global macro liquidity events.
However, in the Indian crypto market, the price volatility of INR-USD also impacts markets, especially the USDT-INR pair.
“Generally, the Indian market has a premium of around 5% because of lower liquidity across exchanges for various reasons. Moreover, the rupee has lost about 2% against the US dollar in the last two weeks, amplifying this premium and hence spike in trading activity,” said Mahin Gupta, founder of Liminal, a digital wallet infrastructure platform.
However, some experts are cautious about the uptick in crypto activity in India.
According to Sidharth Sogani, founder and CEO of CREBACO Global, a research, rating and intelligence company focused on blockchain and cryptocurrencies, crypto trading and user signups may have seen some rise, but it has happened on a low base.
Driven by 30% flat tax on capital gains from crypto assets and 1% tax deducted at source on each crypto transaction, as well as up to 80% fall in digital asset prices, trading activity on crypto exchanges have slumped 80-90% since 1 April 2022.
However, Sogani sees crypto market sentiment improving, especially bitcoin in the near future.
The expert sees bitcoin remaining stable despite challenging inflation and hitting $30,000 level in the next two-three months.
“Fundamentally, bitcoin is very strong. There are a few core parameters working in favor. The transaction fee is at an all-time low, the transaction speed is good, and the difficulty level and the hash rate level are at an all-time high. The number of wallets having bitcoin is also going up. When the fundamentals are great and the price isn’t doing much, that is a very good sign,” said Sogani.