Bitcoin trading increases 25percent premium in India amid demonetization
NewDelhi,Nov22:At a time when the Narendra Modi government’s decision to demonetise high-value currency notes has left Indians scrambling for alternative payment and investment options, the demand for new-age cryptocurrency options has seen a surge. For this and other reasons, Bitcoin, the largest and oldest of cryptocurrencies, is trading at a huge premium in the country.
The demand spike in India follows a similar trend in neighbouring China. In the past month, while the dollar strengthened, and the Chinese currency weakened to an eight-year low, the demand for Bitcoin in China increased dramatically. Over this period, the price has surged nearly 25 per cent to around $730-740 per Bitcoin on major global exchanges.
On Indian exchanges, the Bitcoin prices are being quoted at 22-25 per cent higher than cost. The interest among people here has been fuelled mainly by the government’s demonetisation move.
On November 8, the day Prime Minister Narendra Modi announced that Rs 500 and Rs 1,000 banknotes would cease to be legal tender, Bitcoin was priced at about Rs 52,000 on leading Bitcoin trading exchanges Unocoin and Zebpay. On that day, the international cost of one Bitcoin, when converted into Indian rupee, stood at Rs 46,942. So, the difference between the cost and trading quote came to about 10%. Compared with that, the trading price at present is Rs 63,000-64,000, while the international price is around $740 (about Rs 51,000) – a difference of over 25 per cent.
Unocoin CEO Sathvik Vishwanath says: “The price of Bitcoin is higher than international price because there is high demand but limited supply for Bitcoin among Indian traders.”
Sandeep Goenka, CEO of Zebpay, India’s largest Bitcoin exchange by volumes traded, says: “There is a surge in interest for Bitcoins. Indians are inquiring about Bitcoins as an alternative and safe investment option. They are downloading Zebpay as they want to experiment with digital currencies. There has been a 50% increase in Zebpay downloads.” Google search data show that Indians’ search for the keyword ‘Bitcoin’ was at its peak soon after demonetisation.
Sathvik adds: “It cannot be easily imported because of capital controls in India,” so the supply is always less than demand. But his company Unocoin targets Indians abroad looking to send remittances home. The best way, he suggests, is to buy Bitcoin on an international exchange and transfer it to India, where it can be immediately sold on a Bitcoin exchange. The transfer can take place through blockchain, a transparent public ledger. The Indian receiver, while encashing it, gets a premium and all deals are done using the banking channel, with proper know-your customer records.