NEW DELHI: The cryptocurrency landscape has endured various challenges, including market downturns, regulatory uncertainties, taxation and operational difficulties. Despite this, crypto exchanges are optimistic about the bull phase in cryptocurrency. The confidence in another crypto bull-run further strengthened when Morgan Stanley indicated that the Bitcoin (BTC) halving event approaching in April 2024 would lead to end of crypto winter.
Bitcoin is the top cryptocurrency, accounting for 50% of the total digital asset market. It acts as a proxy for the overall crypto market, influencing other cryptocurrencies. The Bitcoin halving is a process that occurs approximately every four years, where the number of new bitcoins created every 10 minutes is reduced by half. This process is designed to create scarcity and maintain the value of bitcoins. It ensures that the total supply of bitcoins is limited to 21 million, after which no more bitcoins will be mined.
“Estimates of when exactly the next halving will occur vary, but history indicates it has the potential to occur sometime around April 2024. Based on current data, signs indicate that crypto winter may be in the past and that crypto spring is likely on the horizon. However, keep in mind that there have only been three crypto springs to date. In other words, there is still a lot to learn,” Morgan Stanley said in its recent report.
Bitcoin, the world’s biggest cryptocurrency surged 28% in October on investors’ speculations that US regulators may approve a spot bitcoin ETF. This optimism has fuelled expectations of increased demand for bitcoin. According to Edul Patel, CEO & Co-founder of Mudrex, the launch of Bitcoin and Ethereum ETFs, pending regulatory approval, is expected to attract substantial institutional investments into the crypto space. Such developments signal a growing acceptance and recognition of cryptocurrencies as a legitimate asset class, potentially driving further price appreciation and market growth.
As per Rajagopal Menon, Vice President, WazirX, “...a torrent of institutional money is poised to flow into Bitcoin, pending the launch of ETFs. On the regulatory front, G20 nations are gearing up to implement guidelines in line with the Synthesis Paper roadmap. In a nod to both Bitcoin’s iconic colour, one could say: The future is bright, the future is Orange.”
Meanwhile, Vimal Sagar Tiwari, Co-founder and COO, CoinSwitch said, Bitcoin, the largest crypto by market cap, is up by over 60%, from around $16.5k at the beginning of the year to close to $27k at the beginning of October. He too is positive about BTC and the larger crypto market entering a bull phase after the halving event, based on historical trends.
Minal Thukral, Executive Vice President, Growth and Strategy, CoinDCX said “In last 16 years I have seen two bear markets and one bull market...At the current phase, we are facing some challenges, primarily because of the introduction of TDS. Due to this the volumes have shrunk by 80% at CoinDCX. There are exchanges who are moving to foreign exchanges, B2B exchanges. As and when we see regulatory changes in the country, we will start seeing more momentum in India also.”
Experts expect the market to mature as regulation are rolled out by the government. This will lead to consolidation and better governance mechanism put in by the existing players. “It is important to understand it’s a high volatility asset class and hence will require investors especially retail ones be made aware of the risks associated with investing in crypto assets,” Shravan Shetty, MD, Primus Partners said.
“Currently banks are not comfortable since its an unregulated asset class. I think as regulations come in and the market matures expect banks to change their stance towards this asset class,” Shetty added.
Govt stance
According to experts, it is crucial for investors to exercise caution and conduct thorough research before engaging in the market. Recent complaints against exchanges regarding fund refunds highlight the importance of choosing reliable platforms. Meanwhile, most banks are reluctant in tying up with the crypto exchanges after RBI announced its reservations against the cryptocurrencies.
Though exchanges are optimistic about the G20 nations adopting the synthesis paper released by Financial Stability Board (FSB) and International Monetary Fund (IMF) that carries a number of suggestions on regulations of cryptocurrencies, experts have different viewpoint. According to them, regulations will be negative for the crypto industry, as those who deal in crypto will come under Government’s scrutiny.
“Regulations around crypto will make it unattractive as the freedoms it enjoys now will be eliminated. Strict regulations and disclosure requirements will slow things down,” said Charan Singh, Economist and founder of EGROW.
Recently RBI Governor Shaktikanta Das also expressed his concerns over cryptocurrencies. He said that they are a serious threat to global financial stability, especially for emerging market economies like India. He stressed upon the risks involved in crypto which have already been highlighted by the IMF-FSB synthesis paper. Earlier, Das had even called for complete ban on crypto usage.
Besides this, former economic affairs Secretary Subhash Chandra Garg said, “People make investments in financial assets, including cryptos, based on their understanding of the assets, their greed and the risk-reward they see in the asset they invest. My own assessment is that cryptocurrencies are not worth making any investment in India and currently.”
Bitcoin up 28% in October
Bitcoin, the world’s biggest cryptocurrency surged 28% in October on investors’ speculations that US regulators may approve a spot bitcoin ETF. This optimism has fuelled expectations of increased demand for bitcoin