Crypto Quill

Indian cryptocurrency exchanges are experiencing a significant rebound in trading volumes and revenue, following Bitcoin’s rally to new all-time highs. With Bitcoin’s price surging past $89,915, its year-to-date gain has reached approximately 105%, pushing its total market capitalization to $1.74 trillion. This dramatic rise has fueled renewed activity on Indian crypto platforms, reversing the substantial drop in volumes witnessed in 2022.

The Impact of Bitcoin’s Rally on Indian Exchanges

Indian crypto exchanges, which had seen a 90% decline in trading volumes due to regulatory challenges, including the 1% Tax Deducted at Source (TDS) and the broader market downturn, are now enjoying a resurgence. Mridul Gupta, Founding Partner at CoinDCX, shared that the platform’s 24-hour trading volume has surged to $21 million, with peaks hitting $36.5 million on November 10. This marks a dramatic increase from the $5.8 million reported just before November 6.

Vikram Subburaj, Founder of Giottus Crypto Exchange, also highlighted the turnaround, noting a 4x increase in both revenue and volumes. Daily volumes are now at $2 million, a sharp rise from the lows of $500,000 seen during the market slump.

Factors Driving the Crypto Surge

Several factors are contributing to this uptick in the cryptocurrency market. The election victory of Donald Trump in the US has fueled optimism, as investors anticipate regulatory changes that could benefit the crypto industry. In addition, the approval of exchange-traded funds (ETFs) and events like Bitcoin’s halving have historically contributed to such rallies, further fueling investor enthusiasm.

Balaji Srihari, Business Head at CoinSwitch, also mentioned the surge in traffic, revealing that peak hourly traffic has increased nearly sevenfold, while new user signups have quadrupled. Trading volumes, in particular, have surged by 9x, reflecting a broader recovery in investor interest.

Indian Investors and the Shift to Global Platforms

Despite the positive trends, Indian crypto exchanges still face challenges due to the higher tax burdens compared to international platforms. Many Indian investors continue to trade abroad, bypassing the domestic TDS regulations. However, Gupta noted that new guidelines from the Financial Intelligence Unit (FIU) regarding foreign exchange registration are encouraging a return of investors to domestic exchanges.

The Debate on Crypto’s Legitimacy

The renewed interest in cryptocurrencies comes with its share of concerns. High-profile figures like Arundhati Bhattacharya, former chairperson of the State Bank of India, have expressed skepticism about the long-term viability of crypto. She raised concerns over the volatility of crypto values, calling it a speculative commodity without a solid foundation. Warren Buffett, often critical of cryptocurrencies, reiterated his stance by stating he wouldn’t take all the Bitcoin in the world, highlighting his belief that the asset lacks intrinsic value.

Cautious Optimism Amidst Regulatory Challenges

The surge in Bitcoin prices has breathed new life into India’s crypto market, bringing trading volumes and revenue back to levels not seen since the boom of 2021. However, the industry remains cautious as it continues to navigate regulatory challenges, including high taxes and competition from international exchanges. The future of India’s cryptocurrency market will depend on how these factors evolve and whether investor confidence can be sustained in the long term.