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Local, global crypto prices diverge as talks of India ban weigh on sentiment

The price of Bitcoin in US dollar was down 0.3 per cent at around 7 PM IST on Wednesday. However the price in rupee was down 8.9 per cent.

Written by Sunny Verma , Sandeep Singh | New Delhi |
November 25, 2021 3:13:59 am
Bitcoin, Bitcoin news, Indian rupee, us dollar, stock exchange, cryptocurrency news, cryptocurrency news in india, cryptocurrency ban in india, cryptocurrency bill, cryptocurrency marketMarket experts say the sharp fall in prices in rupee terms on Indian exchanges is on account of large number of sellers and very few buyers. (Representational)

While bitcoin and other cryptos were trading with a marginal fall of around 1 per cent, prices in rupees on Indian exchanges crashed by over 10 per cent on Wednesday. The price of Bitcoin in US dollar was down 0.3 per cent at around

7 PM IST on Wednesday. However the price in rupee was down 8.9 per cent. In rupee terms, the price of etherium was down 6.5 per cent and that of WRX (a token created by WazirX) and Shiba Inu Coin was down 13 per cent and 15 per cent, respectively.

Why the variation in prices between Indian and foreign exchanges?

The sharp drop in price on Indian exchanges is driven by domestic news around a Bill to be brought in the winter session of Parliament, which aims to bar private cryptocurrency with a few ‘exceptions’. Market experts say the sharp fall in prices in rupee terms on Indian exchanges is on account of large number of sellers and very few buyers.

“Many crypto investors are rushing to sell their holdings for various factors. While some fear that it may get banned, there are many others who feel that their undisclosed investments may get tracked if it comes under regulation and so they want to exit before the regulation comes in,” said a leading market expert .

However, that is not the case in crypto exchanges in other countries, hence the prices are stable there.

“Only investors who have a digital wallet in foreign jurisdiction and have a bank account in that country will be able to sell their holdings at the global price level. Those in India holding the crypto in rupee terms will have to deal with current volatility in the Indian markets on account of the news around crypto Bill,” said Srinath Sridharan, an independent market expert.

In India, it is not yet clear whether there will be a complete ban on trading, mining and holding of cryptocurrencies. The government intends to bring a Bill to prohibit “all private cryptocurrencies in India” with “certain exceptions”. The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 is listed for introduction in the Lok Sabha in the winter session, starting November 29. However, the exceptions will be known once the Bill is tabled in Parliament.

“Right now it’s complete panic selling on Indian exchanges,” said a Delhi-based crypto trader. “I have an account with CoinDCX. My crypto holdings on etherium and polygon are down nearly 30 per cent in just 1 day since the news of ban became public. Recently, on another crypto, Loopring, I could book nearly 155 per cent profit in a matter of just four days, as it went up from Rs 100 to Rs 255 and then Rs 300 in four days. But this has also fallen to around Rs 200 now,” he said. In a note to its clients Wednesday, CoinDCX said “cryptocurrency is a global phenomenon. An asset held by all and built for all. Hence, your investments are completely safe and secure.” Tradable assets go through volatility and sentiments dictate prices at time, it said.

The government said that the Bill seeks to “create a facilitative framework for the creation of the official digital currency to be issued by the RBI”.

As the contents of the Bill are not yet known, its exceptions and use-cases are also under speculation. Prices of cryptos on Indian exchanges fell, alongside an over 80-100 per cent jump in daily trading volumes, market sources said.

As per industry estimates, there are around 15 million active subscribers on their exchanges in India, with the outstanding value pegged around $6 billion.

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