Indian Cryptocurrency Market Sees Resurgence On Bitcoin’s All-time High Rally

Be it a 30% tax on cryptocurrency sales, 1% TDS on crypto transactions above INR 10,000, or the RBI’s hawkish stance condemning crypto, who isn’t aware of the miseries of an average Indian cryptocurrency investor? However, things took an unexpected turn for crypto enthusiasts this week when Bitcoin soared to break all its records.

With Bitcoin touching its all-time high of $72K on March 13 and then $73K on March 14, Indian crypto investors seemed to be frolicking on back-to-back jackpots. Pertinent to mention that Bitcoin last touched its record high of $65K in November 2021.

According to crypto experts, despite the turbulence that the Indian cryptocurrency market experienced over the past two years, the demand of cryptocurrencies has increased exponentially since February and trading volumes on some major exchanges have shot up in the range of 150-250%. 

Amid this bull run, cryptocurrency analysts told Inc42 that Telegram and WhatsApp channels are being floated as was the case during the bull period of 2021, with new investors ready to take a plunge into the world of virtual assets, even though this could be just a phase and the growth may taper off. 

“Overall 2024 has brought back some cheer to those young investors in India who are more inclined towards making profits quickly and do not prefer the equity markets or other traditional methods,” an analyst said. 

Meanwhile, many homegrown crypto trading platforms have started floating incentives, along with new ETFs, to woo new investors to their platforms.

A case in point is Bengaluru-based crypto trading platform Mudrex, which has launched its Bitcoin spot ETFs for Indian investors with a minimum investment of $5,000. The launch came on the back of various US stock exchanges accepting Bitcoin-based ETFs from January 2024. 

The CEO of Mudrex, Edul Patel, told Inc42 that the exchange expects a growing participation of Indian retail investors in the spot Bitcoin ETF market in the coming months.

“At Mudrex, we have seen a surge in trading activity, with a 192% increase from December to January, followed by a 270% surge from January to February. We onboarded 42,000 new users in February and expect to onboard 1 lakh news users by the March end,” Patel said. 

He added that Mudrex platform has also seen significant number of user onboarding since FII’s ban on foreign crypto exchanges. 

Another cryptocurrency major, CoinSwitch, claimed that it has become the first exchange in India to cross 2 Cr users. 

“The milestone comes amidst a strong resurgence in user activity in India, as investors turn bullish in the wake of the Bitcoin ETFs in the US, the possible approval of Ethereum ETF, and the scheduled Bitcoin halving event,” CoinSwitch cofounder and CEO Ashish Singhal said in a statement.

 Singhal added that since the turn of 2024, user registrations on CoinSwitch have grown by 5X as compared to the daily average user growth in 2023. In just last two weeks, the crypto trading volumes on CoinSwitch platform, he noted.

To attract new crypto investors, the platform is giving away Bitcoins worth INR 20,000 every hour to select users.

CoinDCX, CEO Sumit Gupta told Inc42 that trading volume on his platform has spiked by 150% compared to January 2024.

“There is an overall positivity in the crypto ecosystem. While Bitcoin ETFs and halving have provided the initial push needed to kickstart a positive trajectory after more than two years of a crypto bear market, several important events are driving the market in the right direction. One of them is the pending approval of an ETH ETF by the SEC. Besides, what is exciting is the growing belief of traditional investment players in blockchain technology,” Gupta said.

Meanwhile, WazirX, which relocated its headquarters to Dubai in 2022, also saw aggressive growth in cryptocurrency transaction volumes by as much as 300% in March compared to January 2024.

“This surge can be attributed to the rise in overall crypto prices as Bitcoin has surged to reach its highest since 2021,” Rajagopal Menon, vice president, WazirX told Inc42.

Will Crypto Market Revival Bring Back Overseas Capital?

According to a study conducted by a Delhi-based technology think tank, the new crypto taxation rules introduced in 2022 led to $3.8 Bn worth cryptocurrency trading volume to move to foreign exchanges.

The finance ministry’s FIU in December last year identified various foreign cryptocurrency exchanges, which were found to be violating the country’s anti-money laundering laws. Some of the overseas exchanges whose URLs were banned in India included Binance and Kucoin, among others. 

The government also mandated both foreign and home-grown cryptocurrency exchanges to register with FIU as “reporting entity”. They are obligated to adhere to the stipulated requirements mandated under the Prevention of Money Laundering Act (PMLA) of 2002.

Industry leaders say that these steps have further given a boost to India-based crypto platforms to work with the regulators for sustaining their operations and attract Indian investors to the homegrown exchanges, hence restricting the outflow of capital.

“The shift of millions of user base to overseas exchanges to escape tax deductions as well as the exchanges moving out of India to cities like Dubai has become a trend. However, a slew of changes by the regulators in overseas markets and better regulatory clarity in India towards virtual digital assets will benefit the Indian markets,” a founder of a Bengaluru- based blockchain technology startup said. 

Chiming in, CEO of another Indian crypto currency exchange is of the view that the government’s motive of culling money laundering and preventing millions of young investors from losing their hard- earned money through volatile assets cannot be achieved by a blanket ban, especially when the global economies are turning more receptive towards digital assets.

While the current rally may have provided a boost to the Indian crypto market, there is no telling as to how long will this fad stay. However, for now, industry leaders expect the authorities concerned to regulate this space in a more balanced way so that outgoing crypto transactions could be kept at bay. 

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