Indian crypto exchanges witness substantial trading volume surge: Here's why
What's the story
Indian cryptocurrency exchanges have seen a significant surge in trading volumes, with a month-on-month increase of over 207% from February to March. Major platforms WazirX, CoinDCX, and Zebpay collectively exceeded trading volumes of $584 million in March, up from $189.91 million at the end of February according to data from crypto trading firm CREBACO Global. Additionally, CoinSwitch, another crypto investment platform, also reported its trade volume soaring by over 200% in March.
Market dynamics
Bitcoin prices and ETFs drive trading volume spike
The substantial increase in trading volumes is primarily attributed to Bitcoin prices hitting record highs of $73,000, after institutional investments began flowing in globally through Bitcoin Exchange-Traded Funds (ETFs).
User growth
New user registrations soar on Indian crypto exchanges
Crypto platforms like CoinDCX have seen a significant rise in new user registrations. Mridul Gupta, COO of CoinDCX, linked this growth to the blocking of several offshore exchanges in India in January due to non-compliance with local money laundering regulations. He reported an impressive 150% increase in new user sign-ups and stated that their total sign-ups have reached 1.6 crore.
Investor trends
First-time retail investors remain steady despite registration increase
Edul Patel, Co-founder and CEO of Mudrex, a crypto investment platform, noted that while registrations have increased on his platform, the number of first-time retail investors or new users entering the ecosystem has not changed much. He highlighted that these investors primarily joined to explore newer crypto products offered on their platform. This suggests that the surge in registrations is not necessarily indicative of an increase in first-time retail investors.
Tax impact
Trading activity boost not reflective of retail investments
Despite the surge in trading volumes, industry insiders argue that retail investments have not fully caught up. Rajagopal Menon, Vice President of WazirX, noted that while trading activity has seen a considerable boost, "retail investments have not come in fully and remained subdued due to sentiments around high taxation." He further stated that their trading levels are now 10 times higher compared to bear markets, and new user acquisitions are at their highest in two years.