The rise of cryptocurrencies in 2020 in India
2020 was a year filled with uncertainty across all walks of life. However, amidst this, one of the most extraordinary stories has been the rise of bitcoin. The price of Bitcoin rose by more than 300% on a YTD basis in 2020, and even more if one considers the lowest point that the price reached in 2020. This has been capitalized on all over the world, with investors, both retail and institutional, showing a lot more interest than during the previous rally in 2017, which has led most observers to believe that this is a sign that Bitcoin is here to stay.
One of the biggest examples of crypto’s rise last year has been seen in India, where there has been a lot of interest and investment into Bitcoin and other cryptos. This followed a Supreme Court decision in March 2020 which removed the restrictions on Bitcoin ownership and trading that had been imposed by the Reserve Bank of India, the country’s central bank. This allowed crypto trading platforms and exchanges to set up shop, and this triggered a huge rush into the space. Bitcoin trading volumes hit around $60 million per day on average in India by the end of 2020, showing just how enthusiastic the Indian market is about this space. There are a number of new investors, which is why many platforms and investors are also setting up educational programs and portals to better educate them, which will only help in the development of the sector. This drive to create awareness has been extremely beneficial, and users can also find out how to earn cryptocurrency on the bitcoin gambling blog Winz.io.
The boom in crypto trading has also created a need for more traders at various exchanges, to allow them to cope with the higher volumes being seen in the market now. One of the biggest reasons behind this rush has been the spectacular price rise seen over the last eight months or so. The extremely loose monetary policies we are seeing all over the world, as central banks try to provide support to economies in the wake of the COVID-19 crisis, means that this rally can be expected to continue for quite some time, as monetary support is also not going away any time soon. Improving technology and awareness is another big reason behind this rally, as is improved regulatory environments, with India being just one example of a country where bitcoin trading is now allowed after being banned earlier. This has led to institutional investors jumping into the fray as well, and given that the supply of bitcoin is limited and extremely difficult to increase, this has led to this price rally.
However, there will come a point where regulators will get involved again, especially once people begin to use cryptocurrencies instead of fiat currencies. This is unlikely to take place anytime soon though. In terms of the Indian market, the RBI is expected to begin levying 18% GST on crypto transactions, while it remains to be seen if it will join other central banks which are exploring and experimenting with Central Bank Digital Coins (CBDCs). In any case, taxes on crypto transactions can serve as a useful revenue source for the government, for now, and fiat currencies are unlikely to be overshadowed anytime soon, as institutions and central banks are only just figuring out blockchain and its various applications. However, there is no doubt that cryptocurrencies look like being the way forward, and therefore it will be interesting to chart their progress this year, especially as many analysts believe that Bitcoin will soon rise to as high as $100,000.