Bitcoin Surge Leads to 4-9 Fold Increase in Trade Volumes on Indian Cryptocurrency Exchanges, Enhancing Earnings

The buzz around Bitcoin is back as it recently soared to a record-breaking $89,915, boasting a year-on-year upswing of approximately 105%. This remarkable growth has escalated the cryptocurrency’s cumulative market valuation to an astounding $1.74 trillion. Consequently, trading volumes on Indian cryptocurrency exchanges have surged, a notable turnaround from the dramatic 90% dip experienced following the implementation of a 1% Tax Deducted at Source (TDS) and a slump in Bitcoin’s valuation.

“Trading volumes have significantly increased,” according to Mridul Gupta, a Co-founder at CoinDCX. “Our daily trading volume has escalated to $21 million, with a high of $36.5 million on the 10th of November. This marks a substantial rise from the mere $5.8 million prior to the 6th of November. Remarkably, these figures represent more than a fivefold increase from last year’s volumes, which were approximately $4.35 million during the same timeframe,” he explains.

Amidst this uptrend in trading volume, Indian cryptocurrency trading platforms are experiencing a resurgence in revenue, bouncing back from the lows influenced by the TDS imposition and market volatility. Giottus Crypto Exchange’s Founder, Vikram Subburaj, observed, “We’re witnessing a revenue and volume rise by a factor of four, in stark contrast to the earlier 90% downturn. Presently, our daily trading volumes stand at $2 million, as opposed to the preceding troughs of $500K.”

Back in 2021, cryptocurrency exchanges in India celebrated unprecedented trading activities and their founders gained visibility. Yet, when a 30% tax on cryptocurrency earnings coupled with a 1% TDS became effective from February 1, 2022, trading activities sharply declined, by over 90%. The sector’s challenges were compounded by the collapse of significant crypto entities like FTX, as well as escalating interest rates.

The current bullish momentum in the crypto market is largely attributed to Donald Trump’s electoral success in the US, which could signal regulatory leniency given his previously demonstrated crypto-friendly stance. Additionally, factors such as the endorsement of ETFs in other markets and historic trends such as the Bitcoin halving event have contributed to past rallies. Balaji Srihari, the Business Head at CoinSwitch, comments, “There’s been a noticeable spike. Our peak hourly traffic has surged nearly sevenfold, new user signups have quadrupled since last week, and trading volume has increased by ninefold. These trends indicate a rekindled enthusiasm and engagement in the crypto space.”

Despite this positive trend, Indian exchanges continue to contend with their international counterparts, as numerous invested parties still favor overseas trading to circumvent the TDS. “Tax regulations have certainly had an impact on Indian exchanges; nonetheless, several investors are moving back to domestic platforms,” Gupta remarks, “especially since the Financial Intelligence Unit (FIU) of India has started enforcing new rules concerning foreign exchange registrations.”

Views on cryptocurrency have always been polarized, but it was the heavy imposition of taxes that led to a marked decrease in crypto transactions in India. Now, with trading volume on the rebound, investors and operators alike should proceed with caution.

Arundhati Bhattacharya, the former chairperson of the State Bank of India and now the Chairperson and CEO of Salesforce India, expressed skepticism to Business Today by stating, “There are aspects of cryptocurrencies that concern me. Firstly, their value isn’t regulated by any authoritative entity; it’s highly volatile. Secondly, security issues persist; you can’t be sure about the potential for hacking, nor can you rely on the providers to remain operational.” This was part of her dialogue with BT in an earlier exchange.

The renowned investor Warren Buffett, also known as the Oracle of Omaha, once expressed his disregard for Bitcoin during the 2022 Berkshire Hathaway annual meeting by saying if he were offered all of the Bitcoin in the world for $25, he would decline, questioning, “What would I even do with it?”