Bitcoin rally fuels revival hope for Indian crypto exchanges

The cryptocurrency exchanges in India have got a fresh lease of life following the bull run in Bitcoin, which briefly hit a new all-time high of more than $69,000.

Siddharth Sogani, managing director of CREBACO, expects the price to cross $1,00,000 by the end of the year.

This will see a sharp reversal in the Indian market, which has largely been dormant since the new tax regime was implemented in 2023.

The recent rally in Bitc­oin, the world’s largest cryptocurrency, has been swift.

Bitcoin price has surged from $45,000 per coin a month ago to over $66,000 at present, following a few leading US-based exchange-traded funds mopping up large quantities.

As a result, Indian crypto exchanges have seen a surge in volumes and an increase in active user accounts.

Balaji Srihari, business head of CoinSwitch, said: “In the past month, our trading volumes have surged by 40 per cent. In the past two weeks, the number of users in profit has increased by over 80 per cent.”

CoinDCX, another major exchange, has seen a five-time increase in the trading value from the beginning of February at $5 million in spot to $25 million on February 28.

The exchange’s co-founder, Sumit Gupta, said, “We have seen an increase in the average age of investors from 25 years earlier to 30 years, indicating that smart and mature investors have now entered the market.”

Siddharth Sogani, managing director of CREBACO said: “The primary driver behind Bitcoin's recent surge is the acceptance of Exchange-Traded Funds (ETFs) by the US Securities and Exchange Commission (SEC).

"With major financial institutions such as BlackRock, Vanguard, Valkyrie, VanEck, and Fidelity launching their ETFs, the cumulative inflow of institutional money into Bitcoin through these ETFs has reached $41 billion, with a significant portion of this inflow occurring over the past two months.”

Last week, when the Bitcoin price touched $60,000, in a single day, these institutions purchased 10,050 Bitcoins against a total daily production of 900 Bitcoins, indicating their appetite for the crypto market.

Another significant factor contributing to Bitcoin's upward momentum is the impending halving event.

Every four years, Bitcoin production is programmed to halve, and in the past, in 2012, 2016, and 2020, the market has seen a rally pre and post-halving of production.

The halving event is expected around April 20, which will reduce miner rewards from 6.25 to 3.125 Bitcoin.

Gupta said they were investing heavily in their technology and infrastructure and forging strategic partnerships to ensure leadership in the crypto market.

Going forward, the falling production following the halving event and difficulty in mining are expected to result in Bitcoin prices rallying further.

“The total supply of Bitcoin is capped at 21 million, out of which 19.64 million are already mined.

In the total circulating supply, approximately 4 million Bitcoins are lost forever, and 5 to 7 million Bitcoins are locked in the cold storage wallets.

Hence, the actual liquid supply of the asset class is going down every day as more and more people are buying it, along with institutions such as BlackRock,” according to CREBACO analysis.

Sogani added that with the government's move to urge offshore exchanges to register with the Financial Intelligence Unit of India, there should be regulations in place for Indian crypto investors.