Compared with global markets cryptocurrencies generally trade at a premium in Indian markets. The primary reason is the limited circulation of cryptocurrencies, as most of the mining happens outside India. Currently, however, the trend has got reversed with the listing of the Cryptocurrency Bill in the Parliament, which seeks to prohibit all private cryptos in India with certain exceptions to promote the underlying technology.
At present cryptocurrencies in India are available at a discount compared to global prices. Consider this: on Monday Bitcoin was trading at $57,550 on CoinDesk (the US based company), $57,332 on WazirX and $57,494 on Giottus Cryptocurrency Exchange. Otherwise when the demand was high, before the listing of the Bill the cryptocurrency, Bitcoin prices were trading at premium of 2-5% in India over the international rates.
So why has this happened that the cryptocurrency prices in India are trading at a discount? The main reason has been the negative sentiments on the back of the listing of the Bill, which seeks to prohibit private cryptocurrencies in India.
“Most of the time cryptocurrency prices trade at a premium in India. However, currently, negative sentiments are lingering around in India because of which demand has gone down and prices are lower compared to the international markets. Moreover, in the last week cryptocurrency prices have been in the correction mode which has affected the difference” said Vikram Subburaj, co-founder and CEO of Giottus Cryptocurrency Exchange.
Experts say earlier also when the Bill was listed in the Parliament in February 2021, the prices were corrected sharply in the Indian markets. Similarly, in 2019 when the Reserve Bank of India (RBI) prohibited banks from dealing with cryptocurrency exchanges, the prices were tanked in the Indian market.
Given the details of the Bill are not yet known it has been left open to many interpretations creating a stir in the crypto world. While few say that it can mean that all tokens other than Central Bank Digital Currency or CBDC will be banned others say it can mean all cryptos that do not have a public ledger to track transactions can be banned. However, till the contents of the Bill are not known it is expected that negative sentiments will run the crypto world resulting in low demand and low prices.
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