VOLUMES STILL BELOW ’21 PEAK
In India, crypto exchanges, which are awaiting a white paper on the industry from the government, operate in a regulatory void, as the virtual digital asset (VDA) is neither considered a currency nor a security. Indeed, the average volumes in exchanges on Tuesday were still about 60% lower than the peak of 2021 which was the result of a year-long rally sparked by a March 2020 Supreme Court ruling that had set aside a 2018 Reserve Bank of India (RBI) restriction on banks from dealing in VDAs and facilitating VDA transactions.
With most high-street banks unwilling to entertain exchanges as clients, payment gateways shutting their doors, and the government imposing high taxes on trades and profits, trades have plummeted since 2022.
MANY IN-THE-MONEY POST FED, MICRO-STRATEGY
That changed this week, thanks to Mr. Trump’s professed position on cryptos. “With Trump’s victory and several catalysts, including MicroStrategy’s bold decision to invest up to $42 billion in Bitcoin over the next 3 years, we are clearly in a bull market. Fed’s recent rate cut, following earlier reductions, has created a more favourable environment for alternative assets… The bull market is also pushing up prices of altcoins and meme-driven coins,” said Sumit Gupta, co-founder of CoinDCX, one of the largest local crypto bourses.
The last few days gave many small and well-heeled investors a chance to make money. With USDT (or Tether which serves as a proxy for US dollar) quoting at almost the same level as the inter-bank USD-INR, it was evident several investors were cashing out. Typically, USDT (which is not easily available) quotes at a premium of 6/7% the rupee-dollar exchange rate. But as investors sold Bitcoin-USDT pairs, USDT was sold to convert into INR cash, resulting in the vanishing premium. The last time it happened was in 2022, when panicky investors sold as the Bahamas-based exchange FTX went belly up. This week, it was the result of a profit-booking amid a stunning rally.
“The next milestone would be $100,000 per BTC. Institutional inflows are on the rise and the supply of Bitcoin had halved earlier this year. So on one side, demand is skyrocketing and on the other, supply is reducing. Year-to-date, Bitcoin (BTC) has seen an impressive 105.2% gain from the previous year.
Its total marketcap is now $1.78 trillion, surpassing silver in overall market value,” said Balaji Srihari, business head of the leading crypto platform, CoinSwitch.
BOURSES KEEP FINGERS CROSSED
Unlike stocks, investors can buy a fraction of a crypto. With Bitcoin hitting a new high, there is interest also in coins like Ethereum, Cardano, Solana, Matic, and Doge. “Both institutions and retailers are driving the momentum. In the 2021 bull run, retailers entered the market a little late, but this time the wallet addresses holding 0.001 BTC have been increasing which shows strong retail presence,” said Edul Patel, CEO of Mudrex.
The crypto story is playing out at a point when Indian VDA exchanges are keeping their fingers crossed. Even as they put in security measures following the cyber heist at WazirX and desperately hope that the euphoria in the US might have some rub off on the Indian policy makers, they don’t rule out calls from jittery bankers, RBI officials splashing cold water, and the finance ministry losing its interest.
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Publish date : 2024-11-12 11:07:00
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