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Crypto roots spread deep into India

Crypto roots spread deep into India

non-metro residents form a lion’s share of the fresh wave of Indian investors.
August 1, 2021
2 min read
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Crypto roots spread deep into India

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Crypto roots spread deep into India

the direction in which the Bitcoin price heads on any given day is rather unpredictable. the slightest change in regulation or a tweet from a flamboyant founder can see it plummet or skyrocket. but the enthusiasm for it and other cryptocurrencies within India is going just one way - up. enthusiasm, especially, in non-metropolitan cities.

what’s influencing this trend?

let’s look at some data. Crypto-trading platform CoinDCX has seen sign-ups from tier 2+ Indian cities rise ~49 times in the past six months. these cities also account for more than half the new sign-ups on WazirX this year.

these trading platforms have made buying and selling assets as easy as playing a game. Cryptocurrencies are setting themselves apart with the options to trade 24x7 and instantly cash in on gains. that is attracting investors who have not dabbled in this asset class before. apart from eye watering returns, the growing institutional acceptance has also played a role in energising these first time investors.

the rise of fin-fluencers, who are helping spread financial literacy has also been a major contributor to this trend. investment platforms are supporting educational initiatives, with CoinDCX earmarking ₹10 crore towards them. they are also making it easier for non-metro Indians to get onboard by catering to them in vernacular languages.

regulators remain cryptic

there is, however, a cloud looming over them. while the US Senate recently introduced crypto-taxation provisions in a bill, their status in India remains unclear. the RBI, which was vocal in advocating for a complete ban, is now introducing its own digital currency and deferring to the government’s decision on the rest. the government’s stance itself is rather vague at the moment.

the new gold?

these uncertainties are unlikely to deter prospectors from this new gold rush. Bitcoin is the best performing asset class of the decade, with gains of nearly 20,000,000% since 2011. in the same time, the Nasdaq 100 has delivered ~540% returns, the NSE ~180%, and gold ~100%.

despite the massive rise in crypto prices since mid-2020, there is still a huge potential upside. there are estimated to be around 1 crore crypto investors in India, which is ~0.7% of the population. globally, that figure is around 12 crore people, out of a population of around 780 crore. additionally, many cryptocurrencies are deflationary i.e. they have a limited supply which makes them harder and harder to obtain. some believe they could replace the yellow metal as a ‘store of value’.

on a cautionary note, many influencers have also led their followers into crypto scams and even become victims themselves. so when it comes to investing hard-earned money, whether into crypto or stocks, it’s important to do your homework.