The highly volatile cryptocurrency market is no exception. Rich rewards can often come with great risks. Global uncertainties have sparked a surge in interest in cryptocurrency trading by large institutional investors and the masses. In the past year, Indians have invested more than 10,000,000 dollars in crypto-based companies thanks to increasing digitization and a flexible regulatory framework. Many major cryptocurrency exchanges around the world are actively looking at India’s crypto market. This has seen a steady rise in trading volume and a drop in prices over the last year. Many new cryptocurrency exchanges have emerged in India as part of the ongoing cryptocurrency frenzy. They offer functionality through easy-to-use apps that enable trading, buying, and selling. WazirX, India’s largest cryptocurrency trading platform, doubled its user base from 1 million to 2 million between January 2021 and March 2021.
What is driving the largest crypto exchanges in the world to India?
Binance, the largest cryptocurrency exchange in the world by trade volume, acquired WazirX, an Indian trading platform. Another crypto start-up, Coin DCX secured investment from Seychelles-based BitMEX and San-Francisco-based-giant Coinbase. By June 15, 2021, the investment in Indian crypto- and blockchain startups had reached USD99.7 million. This figure is approximately USD95.4 million for 2020. Global investment in India’s crypto market has increased by a staggering 1487% over the past five years.
Global investors have made huge bets, despite India’s vague policy. This is due to a number of factors.
* Indians with Tech Skills
1.39 billion people are young, with a median age of 28-29 years. They also have a high level of tech-savvy. The older generation prefers to still invest in gold, real property, or equities. However, the younger ones are now more open to the possibility of investing in high-risk cryptocurrency exchanges because they are more adaptable. Chainalysis’s 2020 report lists India as 11th in the global adoption of cryptocurrency. This shows how excited the Indian population is about crypto. The government’s less-than-friendly attitude towards crypto and the rumors surrounding crypto are not enough to dampen the enthusiasm of the youth in the digital currency market.
India has the lowest internet prices in the world. One gigabyte of data on mobile devices costs $0.26, while the global average is $8.53. India is poised to be one of the most important crypto-economies in the world, with almost half of its users accessing affordable internet. SimilarWeb reports that India is the second largest source of traffic to Paxful, a peer-to-peer cryptocurrency trading platform. The “pandemic effect” is still affecting the main economy, but cryptocurrency is growing in popularity as it offers a fast and new way for the younger generation to make money.
It’s safe to say that cryptocurrency could become for Indian millennials as gold was for their parents.
* Rise of Fintech Startups
Multiple trading platforms have emerged as a result of the cryptocurrency craze, including WazirX and CoinSwitch, CoinDCX, and ZebPay. These exchange platforms allow for instant transactions and are highly secure. They can be accessed across multiple platforms. These platforms allow local traders and first-time investors to trade and purchase INR. Trading fees are as low as 0.1%.
WazirX, a leading cryptocurrency exchange platform with more than 900,000. Users, offer customers peer-to-peer transactions. CoinSwitch Kuber is the best cryptocurrency exchange platform in India and is suitable for both beginners and experienced users. Unocoin, India’s oldest cryptocurrency exchange platform, has over a million users who use mobile apps to trade on the platform. CoinDCX offers users the option to exchange 100+ cryptocurrencies and also provides insurance that covers losses in the event of a security breach. Global investors are focusing on India’s many cryptocurrency exchange platforms to profit from this emerging market.
* Mixed Government Response
A bill relating to a ban on virtual currencies could be enacted. It would make it illegal for anyone who uses, issues, mines, trades, or transfers crypto assets. Investors’ fears were eased by Nirmala Sitharaman, Finance, and Corporate Affairs Minister. She stated that the government does not intend to ban cryptocurrency use completely. Deccan Herald, a leading English newspaper, was informed by the Finance Minister that they are clear in their statement that they aren’t closing all avenues. We will give people certain opportunities to experiment with the blockchain, bitcoins, or cryptocurrency. The government is still evaluating the security threats posed by cryptocurrency before issuing a ban.
The Supreme Court overturned the decision of the central bank to prohibit financial institutions from trading in cryptocurrency. This prompted investors to invest heavily in the cryptocurrency market. Despite the fear of a ban, transaction volume continued to rise, and local crypto-exchange user registrations and money inflows increased by 300% over a year. Unocoin, one of India’s oldest crypto exchanges, saw a growth of 20,000 users between January and February 2021. The Zebpay daily volume in February 2021 was equal to that generated during the entire month of February 2020. In a CNBC-TV18 interview, the Finance Minister stated that he could only give one clue about the Indian cryptocurrency situation. “We aren’t closing our minds. We are looking at how experiments can happen in cryptocurrency and the digital world.”
Investors and stakeholders are not content to sit on the sidelines. They want to take advantage of the proliferating digital coin ecosystem until the government bans “private” cryptocurrency.
Is India heading towards financial inclusion with cryptocurrency?
The cryptocurrency market was once a “Boys Club” because of its predominantly male participants. However, the steady increase in female traders and investors has resulted in more gender neutrality in new digital investment methods. Women used to stick with traditional investments, but they now take on more risk and are venturing into India’s crypto market. CoinSwitch, an Indian cryptocurrency platform, saw a 1000% increase of women users after the ruling by the apex court. While women still represent a small portion of the crypto community in India, they are becoming fierce competitors. Women are more likely to save more than their male counterparts, which means that they can invest in high-return assets such as cryptocurrencies with greater variety. Women are also more skilled at analyzing risks and making investment decisions. This makes them more successful investors.
Increased Mainstream Institutional Adoption of Cryptocurrencies
SARS-Covid 19, which caused panic and uncertainty, created a liquidity crisis that lasted well before the economic crisis. To protect their finances, many investors converted their holdings to cash. This led to the collapse of altcoin and bitcoin prices. Even though crypto experienced a major crash it was still the most profitable asset class for 2020. The increased vulnerability of the system, as well as the loss of trust in central bank policies and the current money design, has led to a surge in demand for cryptocurrency. The stellar performance of cryptocurrency during the global financial crisis has fueled interest in virtual currencies in Asia and around the globe.
To meet society’s need for reliable and convenient transaction solutions, digital payment portals like PayPal have shown their support for cryptocurrencies. These cryptocurrencies can be used to buy, sell, or hold virtual assets. Tesla CEO Elon Musk announced that he would invest USD 1.5 billion in cryptocurrency markets. He also stated that the electric company would accept Bitcoin from buyers. This led to a dramatic increase in international bitcoin prices from USD40,000 to USD48,000 in just two days. Mastercard and Visa, two of the largest platforms for payments around the globe, have also endorsed cryptocurrencies by making them available as a means to transact. Mastercard will allow transactions with crypto on the Ethereum blockchain in 2021, while Visa already announced that it would accept transactions using stablecoins.
What is the future of the Indian Cryptocurrency Market?
There are many crypto crashes in India. Despite the huge investment by global counterparts in crypto, local investors remain cautious about investing in crypto due to uncertainty over the legality and volatility of the Indian digital coin ecosystem. The Indian cryptocurrency market has been booming since last January, but less than 1% of all the bitcoins in the world is owned by Indians, which poses a strategic problem for the Indian economy. India’s government plans to create a new panel to examine the possibility of digital currency regulation in the country. They will also focus on blockchain technology and suggest technological improvements.
Diverse industries have realized the potential of blockchain technology to provide an immutable and safe infrastructure. This has allowed them to increase transparency in transactions. The new recommendation of the committee could be a significant step toward determining the future of Indian cryptocurrency. India has over 15 million crypto users. The stakeholders are confident that India will be a major player in the blockchain and crypto markets due to its technical and economic strength. The acceptance of cryptocurrency is increasing, which could result in a higher adoption rate for digital currency.
Another TechSci Research report, “India Cryptocurrency market by offering (Hardware & software), By Process (Mining & Transaction), by type (Bitcoin. Ethereum. Bitcoin Cash. Ripple. Dashcoin. Litecoin. Others), By end user (Banking. Real Estate. Stock Market & Virtual Currency), Forecast & Opportunities. 2026″ states that India’s cryptocurrency market is expected to grow at a substantial CAGR due to reducing transaction costs. India’s cryptocurrency market is also being driven by the growing adoption of digital currency and blockchain technology.