You are here: Home » Markets » Cryptocurrency » Bitcoins
Business Standard

Indian investors join the bitcoin party after Tesla CEO Musk's endorsement

Bitcoin has been on fire ever since Musk announced that Tesla had bought $1.5 billion of the cryptocurrency, and that his electric-vehicle company would accept bitcoin from buyers

Topics
Bitcoin | cryptocurrency | Elon Musk Tesla

Rajesh Bhayani  |  Mumbai 

bitcoin, cryptocurrency, digital
In India, the price has surged from around Rs 28 lakh to about Rs 35 lakh in the last couple of days; it was about Rs 22 lakh on January 27

The price and volume of have surged in the domestic market in the past 15 hours after Chief Executive Officer Elon Musk’s announcement of investment in the cryptocurrency, according to Indian exchanges.

has been on fire ever since Musk announced that had bought $1.5 billion of the cryptocurrency, and that his electric-vehicle company would accept from buyers. The announcement saw the international bitcoin price cross $48,000 from below $40,000 in just two days. In India, the price has surged from around Rs 28 lakh to about Rs 35 lakh in the last couple of days; it was about Rs 22 lakh on January 27.

However, there is much more happening in the Indian crypto industry after the government announced its intention to come up with a Bill to prohibit private cryptocurrencies. Initially retail investors sold private cryptocurrencies on this news, leading to the domestic market price of bitcoin trading at a discount of 6-7 per cent to its international price the day after Musk’s announcement. However, smart investors bought it back, pushing up the price to a marginal premium over the international price. Now, bitcoin in India is 1-2 per cent higher than its international price.

“Information inconsistency due to the proposed government Bill (regulation) has provided a perfect opportunity for sophisticated investors and market makers to make money at the cost of gullible retail investors. They (retail investors) are liquidating crypto assets. Hence the sudden spike in trading volumes across Indian exchanges,” said Gaurav Mehta, founder, National Digital Asset Exchange (NDAX).

ALSO READ: Explained: The rise and rise of Bitcoin; India investment rules

With rising volumes, there has been a constant supply of cryptocurrencies in the Indian market but there is hardly focus on “who is providing this liquidity”.

Industry officials say the supply is coming from overseas investors. They add that politicians across parties also have exposure to bitcoin and want the crypto to be regulated rather than banned. This gave comfort to investors to buy cryptos when retail investors sold them recently after the announcement of a proposed Bill a few days before the Union Budget.

Meanwhile, WazirX, one of India’s leading exchanges, has seen daily trading volumes in bitcoin double to 2,000-2,500 from 1,000-1,250 a fortnight ago. After the news of the chief buying bitcoin, Gaurav Daheke, chief executive officer of Bitbns, an Indian crypto-exchange, tweeted: “The Tesla model-3 price in bitcoin is now less than one bitcoin”, indicating the interest crypto-players have seen in India after the news.

ALSO READ: Can you buy a Tesla with bitcoin? How the crypto payments might work

The volume surge is also reflected in leading exchanges in India facing a huge response and pressure on their support functions.


chart

Coindcx, another exchange, has seen a sharp spurt in volumes and an increase in new investors in the past 24 hours, leading to its support machinery slowing.

Another leading exchange has sent alerts through social media to its investors, stating that their support system has slowed after the increase in investor queries and advised such investors to calm down and gave comfort that their queries will be responded to.

Siddharth Sogani, managing director of CREBACO Global, a research and intelligence company for blockchain and crypto-currencies and providing rating to the industry, said: “Visionary entrepreneurs like investing in crypto are among early adopters. I see Apple, Microsoft, and all the other blue-chip companies moving their funds to crypto as a reserve very soon. can also make huge profits if the industry is regulated, or else lose the opportunity.”

ALSO READ: Bitcoin powers to new high as Elon Musk's Tesla takes it mainstream

He sees bitcoin at $100,000 by the end of 2021. He says globally too volumes surged three times after Musk’s announcement.

Now several campaigns are also being run to support bitcoin and other cryptos amid talk of foreign funding to fund these campaigns.

#IndiaWantsCrypto, among the oldest campaigns, was started by Nischal Shetty, founder and chief executive officer of WazirX, 831 days ago. Among the recent ones are #IndiaWantsBitcoin, while a website indiawantscrypto.net was floated to support the crypto industry.

Exchanges are telling investors to visit these campaign sites where contact details of all MPs are given and one can select the MP from one’s region to impress upon the latter that cryptos should not be banned. Exchanges are providing templates to investors on what they should be writing to MPs.

Meanwhile, independent law firm Khaitan & Company, along with CREBACO, has proposed a draft Bill and detailed regulations for the Indian crypto industry to all government departments concerned. Copies of this paper have been sent to all MPs to educate them and bring the industry under regulation.

Sogani said, “The government is considering our representation which we made with Khaitan & Company.”

On Tuesday, Union Minister of State for Finance Anurag Thakur said in Parliament the government was considering the Bill and it would go to the cabinet soon.

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Wed, February 10 2021. 01:28 IST
RECOMMENDED FOR YOU
.