Rich rewards often involve great risks, and the same is true with the highly volatile cryptocurrency market. Uncertainties in 2020 in the world led to an intense interest of the masses and large institutional investors in the trading of cryptocurrencies, a new age asset class. The rise of digitization, the flexible regulatory framework, and the removal of the supreme court ban on banks dealing with crypto-based companies have parked investments of more than 10 million Indians in the last year.
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Several major global cryptocurrency exchanges are actively scouting the Indian crypto market, which has shown sustained growth in daily trading volume over the past year amid a large drop in prices as many investors have seen the purchase of value. As the cryptocurrency frenzy continues, many new cryptocurrency exchanges have arrived in the country that allow you to buy, sell and trade by offering functionality through user-friendly applications. WazirX, India’s largest crypto trading platform doubled its users from one million to two million between January and March 2021.
What drives the world’s largest crypto exchanges to the Indian market?
In 2019, the world’s largest cryptocurrency exchange by trading volume, Binance acquired the Indian trading platform, WazirX. Another crypto start up, Coin DCX has secured investment from Seychelles-based BitMEX and San-Francisco-based giant Coinbase. Crypto and blockchain startups in India have attracted investments of USD 99.7 million as of June 15, 2021, which was about USD 95.4 million in 2020. Over the past five years, the global investment in the Indian crypto market has increased by 1487%.
Despite India’s unclear policy, global investors are placing huge bets on the country’s digital currency ecosystem due to a variety of factors such as
• Tech-savvy Indian population
The predominant population of 1.39 billion are young (median age between 28 and 29 years) and tech-savvy. While the older generation still prefers to invest in gold, real estate, patents, or stocks, the newer ones embrace high-risk cryptocurrency exchanges because they are more adaptable to them. India ranks 11th in Chainalysis’ 2020 report list for global crypto adoption, which shows the excitement for crypto among the Indian population. Not even the less friendly attitude of the government towards crypto or the rumors that revolve around crypto are able to shake the confidence of the young population in the digital currency market.
India offers the cheapest internet in the world, where a gigabyte of mobile data costs around $0.26 while the global average is $8.53. Therefore, nearly half a billion users are taking advantage of affordable Internet access, which increases India’s potential to become one of the world’s largest crypto economies. According to SimilarWeb, the country is the second largest source of web traffic to the peer-to-peer bitcoin trading platform, Paxful. While the mainstream economy is still struggling from the “pandemic effect”, cryptocurrency is gaining momentum in the country as it provides the young generation with a new and fast way to earn money.
It is safe to say that crypto could become to Indian millennials what gold is to their parents!
• Rise of Fintech Start ups
The fortune of cryptocurrency has led to the emergence of many trading platforms such as WazirX, CoinSwitch, CoinDCX, ZebPay, Unocoin, and many others. These crypto exchange platforms are highly secured, accessible on different platforms, and allow instant transactions, providing a friendly interface for crypto enthusiasts to buy, sell or exchange digital assets without limits. Many of these platforms accept INR for purchases and trading fees as low as 0.1% so the simple, fast and secure platforms present a lucrative opportunity for both first-time investors and local traders.
WazirX is one of the leading cryptocurrency exchange platforms with over 900,000 users providing customers with peer-to-peer transaction capabilities. CoinSwitch Kuber provides the best cryptocurrency exchange platform for Indians and is ideal for beginners as well as everyday practitioners. Unocoin is one of the oldest cryptocurrency exchange platforms in India which has more than one million traders through mobile applications. CoinDCX provides users with more than 100 cryptocurrencies as an option to trade and also provides investors with insurance to cover losses in the event of a security breach. So, global investors are paying attention to the plethora of cryptocurrency exchange platforms in India to take advantage of the emerging market.
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• Mixed government response
The legislative bill regarding a ban against a virtual currency that criminalizes anyone engaged in possession, issuance, mining, trading and transfer of crypto assets may be enacted into law. However, Finance and Corporate Affairs Minister Nirmala Sitharaman allayed investors’ concerns, saying the government has no plans to completely phase out the use of cryptocurrency. In a statement given to a leading English newspaper, Deccan Herald, the Finance Minister said: “From our side, we are very clear that we have not closed all the options. We are allowing some windows for people to do experiments on to the blockchain, bitcoins. , or cryptocurrency”. It is evident that the government is still scrutinizing the national security risks presented by cryptocurrencies before deciding to put a complete ban on it.
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In March 2020, the Supreme Court overturned the decision of the central bank to prohibit financial institutions from dealing in cryptocurrencies, which prompted investors to accumulate in the cryptocurrency market. Despite the persistent fear of the ban, transaction volumes continue to swell, and user registration and money flows in the local crypto exchange have become 30 times from a year ago. One of India’s oldest exchanges, Unocoin added 20,000 users in January and February 2021. Zebpay’s total volume per day in February 2021 was equivalent to the volume generated in the entire month of February 2020. Addressing the cryptocurrency scenario in India, Finance. Minister said in an interview CNBC-TV18, “I can only give this clue that we are not closed our minds, we are looking for ways in which experiments can happen in the digital world and cryptocurrency.”
Rather than sitting on the sidelines, investors and stakeholders want to do their best to proliferate the digital currency ecosystem until the government introduces the ban on “private” cryptocurrency and announces the sovereign digital currency.
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Is India moving towards financial inclusion with cryptocurrency?
Once considered a “Boys Club” due to the predominance of the male population in the cryptocurrency market, the growing number of women Investors and traders has led to more gender neutrality in the new and digital form of investment methods. Earlier, women used to stick to traditional investments, but now they have become risk takers and are venturing into the crypto space in India. After the apex court clarified the legality of “virtual currency”, the Indian cryptocurrency platform, CoinSwitch witnessed a 1000% exponential increase in its female users. Although women investors still make up a small percentage of the crypto community, they pose a fierce competition in the Indian market. Women tend to save much more than their male counterparts and more savings means more diversity in investments, such as high-yielding assets like cryptocurrencies. In addition, women are more analytical and better at evaluating risks before making the right investment choices, so they are more successful investors.
Increase mainstream institutional adoption of Cryptocurrencies
The uncertainty and panic caused by SARS-Covid 19 led to a liquidity crisis even before the economic crisis began. Many investors converted their holdings into cash to safeguard their finances, which resulted in the collapsed prices of bitcoin and altcoins. But even though the crypto suffered a major crash, it still managed to be the best performing asset class of the year 2020. With the increased vulnerability of the system and the loss of confidence in the policies of the central bank and money in its current design, people have an increased appetite for digital currencies which has resulted in the rebound of cryptocurrency. Due to the stellar performance of cryptocurrency in the middle of the global financial crisis, the uptrend has strengthened the interest in the virtual currency market in Asia and the rest of the world.
In addition, to feed society’s demand for convenient and reliable transaction solutions, digital payment gateways such as PayPal have also shown their support towards cryptocurrencies that can allow consumers to hold, buy or sell with virtual assets . Recently, the CEO of Tesla, Elon Musk, made an announcement of the investment in the cryptocurrency market worth 1.5 billion USD, and that the electric company will accept bitcoin from buyers, which led to an international jump of the bitcoin price from USD 40,000 to USD 48,000 in two. days Two of the largest platforms for making payments in the world, Visa and Mastercard have also approved cryptocurrencies by introducing them as a medium to make transactions. While Visa has already made the announcement to allow transactions with stable coins on the Ethereum blockchain, Mastercard will start transactions with crypto sometime in 2021.
What does the future hold for the Cryptocurrency market in India?
The Indian cryptocurrency market is not immune to the terrible crypto crashes. Despite huge investments from global counterparts, local investors still keep distance from crypto investments due to uncertainty about the legality of the digital currency ecosystem in India, as well as high volatility of the market. Although the cryptocurrency market has been growing since last year, Indians own less than 1% of the world’s bitcoin, which creates a strategic disadvantage for the Indian economy. The Indian government plans to appoint a new panel to study the possibility of regulating digital currencies in the country, as well as to focus on blockchain technology and propose technological improvements.
The ability of blockchain technology to provide a secure and immutable infrastructure has been realized by various industries to instill transparency in transactions. For a country with more than 15 million cryptocurrencies in use, the new recommendation from the committee could hold great value in determining the future of cryptocurrency in India. However, stakeholders believe that technical and economic power will make India a key player in the crypto and blockchain market. Little by little, cryptocurrency is gaining mainstream acceptance, which could lead to higher adoption of digital currency.
According to another TechSci Research Report on “The Cryptocurrency Market India By Offering (Hardware and Software), By Process (Mining and Transactions), By Type (Bitcoin, Etgereum, Bitcoin Cash, Ripple, Dashcoin, Litecoin, Others), By End User (Banking, Real Estate, Stock Exchange and Virtual Currency), By Region, Forecast & Opportunities, 2026″, India’s cryptocurrency is expected to grow at a significant CAGR due to the growing demand for transparency and reduced transaction costs. Also, the growing adoption of currency digital and growing blockchain technology are fueling the cryptocurrency market in India.