Money & Banking

As China bans cryptocurrencies, Indian exchanges ‘feel the heat’

Debangana Ghosh / Surabhi Mumbai | Updated on September 26, 2021

See slowdown in trading volume; players say this is a short-term trend

China’s blanket ban on crypto mining and transactions resulted in a 9.26 per cent fall in the global cryptocurrency market capitalisation on Sunday and a 29.8 per cent decrease in trading volume. Indian crypto trading ecosystem, too, witnessed a slowdown in trading volume by about 30 per cent.

For example, CoinSwitch Kuber saw its total crypto transactions over the weekend plunge by nearly 30 per cent, while there was a 50 per cent decrease in the volume of transactions compared to the average monthly trade volume.

‘Had more buying orders’

Sharan Nair, CBO, CoinSwitch Kuber, sees this as a short-term trend. “In my experience in the industry over the years, it always bounces back. Many older investors who have been invested in the crypto market for over a year were looking for better deals on cryptos as the prices dived during the weekend. A few of the newer ones who have recently joined, say about four to five months back, were panicking a bit and were trying to sell, but overall we still had more buying orders,” he told BusinessLine.

“As the price of Bitcoin and Ethereum dropped by around 7-10 per cent, the prices of other smaller cryptocurrencies fell by 20 per cent or more. Many utilised the opportunity to buy more Bitcoins, while others bought alternative cryptocurrencies at much lower prices, Gaurav Dahake, founder and CEO, Bitbns, told BusinessLine.

“Cryptocurrencies such as Solana and Terra Luna found more buyers. This was a short-term reaction, the prices have already started going up,” he added.

As of Sunday evening, Bitcoin still continued to trade in red, reaching $43,316.17 against $45,059.20 on Friday when the announcement came out.

Total market cap

Around the same time, total market capitalisation recovered slightly to reach $1.942 trillion and the volumes touched 200.128 billion, though still away from Friday’s market cap of $2.03 trillion and volume of $240.099 billion, according to numbers on TradingView.

Kapil Rathi, Co-Founder and Chief Executive Officer at Cross Tower, said: “The tether stablecoin, USDT, is trading below its market price, indicating an outflow from China. Normally, USDT trades at a 1.5 per cent negative premium to its equivalent value in the Chinese Yuan.

“In last 24 hours, we have seen it trading as low as 4.3 per cent below those averages on OTC markets in Asia.”

“Some panic selling will happen, but it is a knee-jerk reaction. It will get corrected to some extent. One must realise this is not the first time something like this has happened,” said Sathvik Vishwanath, co-founder of cryptocurrency exchange Unocoin.

Published on September 26, 2021

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