After FTX chaos, Indian crypto exchanges try to calm nervous investors

Cryptocurrency news: On Friday, the crypto market cap was at $826 billion, Bitcoin was trading at $16,451 and Ethereum at $1,180

Cryptocurrency prices have remained muted amid intense selling pressure. The FTX saga has resulted in liquidity pressures in brokerages as big as Genesis. Total market capitalisation fell below the $800 billion mark during the week but later recovered marginally. On Friday, it was at $826 billion. Bitcoin was trading at $16,451, and Ethereum was at $1,180.

"This week, the broader crypto market came under intense selling pressure due to Genesis dealing with liquidity issues. Before the FTX fiasco, Bitcoin traded around the $19,000 level but fell to $15,000 before finding support above the $16,000 zone. Bitcoin has been holding well above the $16,000 level for the past few days," Alankar Saxena, CTO and co-founder of crypto investing platform Mudrex told Business Standard.

"The drop was majorly due to stolen Ethereum being dumped and disbursed to multiple wallets by the FTX exchange hacker. The same and looming bankruptcy concern around Genesis trading and the subsequent effect on Grayscale or Digital currency Group (DCG) caused a sharp fall in Bitcoin prices too," Anurag Dixit, founder of crypto asset management platform, Kunji said.

The unfolding of the FTX saga continued to reveal starker details.

"The details emerging from the FTX bankruptcy filing revealed that the underlying jumble is a lot murkier and the industry continued to guess the potential spread of contagion. Most notably, the top 50 creditors were owed over $3 billion, but their names were kept confidential, creating more speculation in the markets," Parth Chaturvedi, Crypto Ecosystem lead at CoinSwitch, said.

Gaining investors' trust

Following the FTX fiasco, several crypto exchanges in the country tried to calm the investors' fears.

CoinDCX published its Proof of Reserves (PoR) on November 24. It made its record for on-chain and off-chain asset balances and wallet addresses available for public viewing and verification.

"With this, we want to instil complete trust in the users. We feel that access to transparency is not a privilege but a right of users," Sumit Gupta, co-founder and CEO of CoinDCX, said.

Another major exchange, CoinSwitch, released a third-party report confirming that its overall balances were higher than the customer holdings. 

"We will continue to evaluate other ways of establishing trust and transparency as we help India participate meaningfully in the global crypto revolution," said Ashish Singhal, co-founder and CEO of CoinSwitch.

CoinSwitch also launched CoinSwitch Pro, a KYC-compliant platform that allowed users to trade Crypto assets in Indian rupees across multiple exchanges with a single login.

Crypto prices: What to expect?

"The overall crypto ecosystem is in a delicate state and high volatility should be expected for next month," Dixit added.

"If it [Bitcoin] falls below the current level, the next support would be in the $16,200 zone," Saxena added.