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Despite odds, hunger for Bitcoins persists

By Rajesh Bhayani
Last updated on: February 08, 2018 21:36 IST
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Indian exchanges see spurt in volumes due to the entry of newcomers to the trade


The crypto currency bubble seems to have finally burst in 2018, with prices and market cap down by two third from peak levels.


The Bitcoin price, which peaked at around Rs 15 lakh in December was quoted at Rs 428,000 on Tuesday afternoon while in international exchanges it was quoting around $6,100.

On some international exchanges it fell below $6,000 for a while.

The total Bitcoin market cap was just a tad above $100 billion.

Interestingly, soon after Finance Minister Arun Jaitley's Budget speech, in which he said Bitcoin wasn't legal tender and could not be accepted as a mode of payment, there was panic selling for a while on Indian exchanges, with the price briefly quoting at a slight discount.

Later on, however, many investors were waiting to enter at dips due to which volumes increased on Indian Bitcoin exchanges.

Government official say that regulations for crypto currency exchanges are in the final stages and that the exchanges are eagerly awaiting them.

Nischint Sanghavi, Head of Exchange, Zebpay says, "We are constantly educating and alerting our users on Bitcoin and its price volatility, and encourage them to understand the technology.

"Post the references to cryptocurrencies (crypto-assets) in the Budget speech, the prices stabilised within half an hour and are now mostly following global cues.

"Volumes have been strong across global exchanges this week and there has been an equal amount of interest in Bitcoin and crypto currencies in India.

"We look forward to the regulations in the cryptocurrency space this year."

Zebpay is the largest bitcoin exchange and claims on its website that it has three million-plus users.

The exchange recently started trading in Litecoin as well, but since the launch of this currency, its prices have been falling.

While some investors who entered during October-November booked partial profits at high levels, very late entrants have been saddled with huge losses.

Sathvik Vishwanath, founder and CEO, Unocoin, the second biggest exchange says, “We are now seeing a new set of buyers who wanted to buy Bitcoin when it was low, but seeing that the prices are high already now, they are jumping on board."

Such volatility and corrections are not new in the crypto space -- it is just that only the newcomers are seeing it for the first time.

And it is because of this (the entry of new buyers), volumes are not affected.

Several exchanges in India have also improved technology, which is helping increase liquidity, even as the difference between bid and ask price has narrowed from 3-4 per cent to negligible levels.

This narrow gap is helping those trading on crypto exchanges.

Ashrith Govind, founder of Bengaluru-based start-up WiLoop Networks, who has been accepting fees in Bitcoin from overseas users for the past several years, and who is a long-time Bitcoin investor, says, “I will keep averaging at current levels which is at a discount more than 60 per cent from the highs, and increase my bitcoin positions.”

He says if the fall continues, it could be even deeper than the current levels. “I am absolutely bullish on bitcoin in the long term, considering the amount of attention it is able to generate lately,” says Govind.

There are several such investors who are investing when they get opportunity at low levels which is keeping volumes on exchanges high.

After India’s Budget proposals on crypto currencies and news of hacking of a Japanese Bitcoin exchange, prices started falling rapidly.

Nouriel Roubini, Professor at Stern School, NYU, chairman of Roubini Macro Associates and renowned economist, who is also known as Dr Doom because he predicted the past market crash, tweeted on Tuesday: “Bitcoin down to $6650, almost 20 per cent crash for the day, and down over 66 per cent from its peak. Still a long way down to ZERO.”

While he is known to have a strong dislike for the crypto currency, the market did take note and lost 10 per cent following his tweet.

Photograph: Dado Ruvic/Reuters

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Rajesh Bhayani in Mumbai
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