Mumbai: Vishal Gupta is busy even when he is sitting in a hair cutting salon in Noida’s Sector 168.
The 34-year-old crypto investor is keeping tabs on Bitcoin prices through an app, looking for signals of which way it will head.
Across India, the situation is little different. About 20 million people in the country have jumped on to the crypto bandwagon in 2021. Cryptocurrencies have even become part of the Indian investor’s lexicon.
Currently, Indians hold crypto assets worth $5.3 billion.
“Bitcoin (BTC) prices dictate the rest of the market. I am not getting a clear sense of how it will move in the near future, so I am tracking it closely,” Gupta says.
Aided by high decibel campaigns and crypto prices touching all-time highs in April 2021 (BTC touched $63,729 on April 3), many small Indian investors put their risk capital in cryptocurrencies.
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At first, they mainly picked up Bitcoin, the world’s first and most popular currency.
They followed that up with Ethereum, and later started experimenting with alternative (alt) coins like Solana, Polygon, and Terraluna, and stable coins like Tether, too.
As a result, crypto platforms witnessed record growth in users and transaction volumes.
The biggest Indian crypto broking platform, CoinSwitch Kuber, registered a 3,500% rise in transaction volumes and touched 14 million users recently.
Leading cryptocurrency exchange, WazirX, witnessed record trading volume of over $43 billion in 2021 – the highest in India – a growth of 1,735% from 2020.
BitBns, another leading exchange, increased its user base by 849 percent and trading volumes by more than 45 times in the last year.
“2021 was a blowout year for most crypto companies,” says Gaurav Dahake, founder and chief executive of cryptocurrency exchange BitBns.
As the year progressed, cryptocurrencies became mainstream quickly.
People from tier 2 and tier 3 cities started participating in numbers, and the key players also launched new products to attract a wider user base.
“We’ve come a long way in 2021. We started this year with just about 1.5 million registered users and crossed 14.5 million users by the end of the year. From being a 30-member team working out of a small space in Bangalore back in January, we are already 400-strong and united in the goal of “making money equal for all,” says Ashish Singhal, founder and CEO, CoinSwitch Kuber.
Despite two crashes this year – in May and early December – Indians continued to flock to the cryptocurrency bandwagon, fuelled by outsized returns.
People who invested even small sums in 2020 or 2019 have made handsome returns.
The maximum number of new people joined crypto platforms in 2021.
“So, these investors tend to panic and sell during crashes and periods of high volatility. They might still be in the red,” crypto investor Gupta says.
Crypto also brought in new cohorts of investors to the market—youngsters and women.
“Our research shows that for many youngsters, cryptocurrencies were their first ever investment,” says Praveen Kumar, founder and CEO of blockchain company Belfrics Group.
At CoinSwitch Kuber, 15% of the total user base is women.
A Systematic Investment Plan by BitsBns witnessed 2.5 times more participation from women.
Crypto is, however, a very volatile asset class, and Indian investors are slowly getting used to the vagaries of the market.
On Jan 1, 2021, Bitcoin was at $29,374 (it touched $48,174 as of 5 pm on Friday), while Ethereum was at $730.37 (at $3,783.48 as of 5 pm).
In October, Shiba Inu gave a return of 828.85 % , while Dogecoin’s one-year return was 1,673.75%.
In November, Bitcoin touched an all-time high of $68,000.
Many speculative investors made a fortune by investing small sums in meme coins such as Shiba Inu and Dogecoin and profiting over time.
According to a report by cryptocurrency research firm Chainalysis, India is one of the world’s fastest growing crypto markets, increasing by 641% between July 2020 and June 2021.
At present, the government is in the process of formulating a crypto legislation, but the regulations might get delayed due to the complex nature of crypto exchanges.
Stakeholders, including regulators, have made their representations to a panel of federal lawmakers, and the industry is expecting the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 to become law during the upcoming budget session.
“With a progressive law in place, crypto mainstreaming will continue in 2022 too,” says Dahake of BitBns.