News on the Chinese Central Banks' inspections of Bitcoin exchanges led to a significant decline in the price of Bitcoin. Yet, some markets remain unaffected, including India, which demonstrated an all-time high value of Bitcoin at $1,080.
In the midst of this chaos, the Indian Bitcoin exchange market observed a consistent growth in daily trading volume and demand. The worsening financial turmoil and the uncertainty of the nation’s economy have raised serious concerns on both long and short-term performance of the Indian rupee.
As the circulation of the national currency of India was cut in half within months since the announcement of demonetization, Indian investors and traders began to search for safe alternatives other than gold, which is also being confiscated and seized by the local government.
Robust Indian Bitcoin infrastructure
Unlike many regions, the Indian Bitcoin market has a robust Bitcoin infrastructure, with reputable and regulated Bitcoin exchanges including Zebpay, Coinsecure and Unocoin. The three venture capital-backed exchanges have provided the necessary infrastructure for local investors to trade Bitcoin with ease.
Reliable services and trading platforms of the above-mentioned exchanges simplified the process of pivoting away from traditional banking systems and fiat-based services.
Unocoin has even reported that its user base doubled in the past two months, demonstrating the rapid growth of the Bitcoin user base in India and the demand for the digital currency.
Sathvik Vishwanath, co-founder of Unocoin stated:
"Two years ago, I had to explain to people what a Bitcoin was. Today, people are more aware and we have over 1.27 lakh users. Just in the last two months, those numbers have doubled.”
Currently, the price of Bitcoin on the Indian Bitcoin exchange market remains strong at $972, a value that is approximately 17 percent higher than the price of Bitcoin at global Bitcoin exchanges on average.
If this economic uncertainty and financial instability in India stemming from the demonetization of banknotes continues, it will likely cause the value of Bitcoin to rise further. The World Bank went as far as downgrading India’s growth forecast earlier this week, which led to a further devaluation of the Indian rupee and stronger performance of Bitcoin on the Indian Bitcoin exchange market.
“Continued tailwinds from low oil prices and solid agricultural output were partly offset by challenges associated with the withdrawal of a large volume of currency in circulation and subsequent replacement with new notes,” said the World Bank.