After Tesla Chief Executive Officer Elon Musk’s announcement of investment in the cryptocurrency, according to Indian exchanges, the price and volume of bitcoin have surged in the domestic market in the past 15 years. Bitcoin has been in news since Musk announced that Tesla had bought $1.5 billion of the cryptocurrency, and that his electric-vehicle company would accept bitcoin 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. A lot is happening in the Indian crypto industry after the government announced that it has the intention to come up with a bill to prohibit private crypto currencies.
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). 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 cryptocurrency 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 Tesla 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.