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Indian Bitcoin exchanges urge investor restraint in highly volatile market

While prices of the crypto currency have crashed globally, it is trading at a 20% premium in India

Rajesh Bhayani  |  Mumbai 

Bitcoins are not mined in India, due to high electricity and manpower cost

prices have shed 20 per cent the past three days from about $5,000 per unit in international market to $4,030 on Tuesday morning. In India, however, investors are rushing to buy the and domestic prices are quoted at 20 per cent premium.

The country's leading exchange, Zebpay, issued an advisory to investors saying, "Due to high demand and low supply of Bitcoins, both buying and selling prices are higher in India compared to international prices." It warned investors to observe caution while buying or selling the currency, as prices are volatile.

Unocoin, another Indian exchange, has also put a note on its website stating, "Some of the big withdrawals to a address are being processed manually. Kindly expect a delay of 1-2 working hours for its processing."

Prices in India are hovering around Rs 3.15 lakh a unit for buying while global prices are quoting in the range of $4,050-4,100. This indicates that Indian prices are quoted at a premium of 20 per cent to the international market. High premiums are not new thing, but it is interesting to note that investors are prepared to pay a premium at such high prices. However, some selling has begun.

In India, Bitcoins are not mined due to high electricity and manpower cost, while China produces the most due to cheap electricity.

The crash in prices internationally is a result of the sweeping action Chinese regulators took against domestic initial coin offerings (ICOs), the nascent funding mechanism was founded to enable investment in the The regulator was calling on exchanges to cease the trading of tokens and demanding that platforms issue refunds to select customers.

Globally there was a mania of ICOs or initial coin offerings, which are somewhat similar to initial public offerings of shares. In ICOs, they were offering tokens for Bitcoins and raising funds to invest in crypto currencies in an unregulated environment. So far, an amount far in excess of a billion dollars has been raised through this instrument and the resultant volatility and rapid rise in and prices have had regulators worried.

Other crypto currencies that have seen sharp spurts and falls include and Bitcash, which is another form of in just three days, the overall market capitalisation fell from $174 billion to $134 billion early Tuesday morning before rising to $140 billion, while Bitcoin's share, which was 45 per cent of the total market cap three days ago, has increased to 48 per cent.

was hovering at $1,074 at the start of the current financial year and has risen four-fold in just eight months. Two weeks back, had quoted Sheba Jafari, a chief technical analyst at saying, "She anticipates that the price will continue to rise to a maximum of $4,827 during its fifth wave. However, she said she doesn't believe that will reach $5,000 during its fifth wave. In fact, she expects the price to crash by more than 38 per cent at the completion of the wave."

Having crashed nearly 20 per cebt from its peak, it remains to be seen whether or not meets Jafari's projections.

Price effect
  • crashed from a little below $5,000 a unit to $4,030, a 20% fall, in three days
  • Investors are rushing to buy it and domestic prices are at a 20% premium 
  • Due to high demand and low supply of bitcoin, buy and sell prices are higher in India compared to international prices
  • Global price crash is because Chinese regulators took sweeping action against domestic initial coin offerings
  • Initial coin offerings are similar to IPOs of shares, with offerings of token for and raising funds

First Published: Wed, September 06 2017. 01:56 IST