Although there are still some fears around a blanket ban of India’s digital asset market, the peer-to-peer (P2P) trading market continues to surge. It hit an all-time high in August, and the speed of its growth has not yet slowed. The growth initially began after the Supreme Court found the Reserve Bank of India’s ban on financial institutions facilitating cryptocurrency exchanges to be unconstitutional. Since then, interest in P2P has grown.
How P2P Has Grown Since March 2020
Back in January 2020, only $1.52 million in weekly trading volume was taking place in India. By the first week of August, that had tripled to $4.4 million in United States dollar equivalents. Even in March, around the time the Supreme Court lifted the ban, the weekly volume was close to $2.28 million.
Thoughts About P2P Growth Rates
Nischal Shetty, who is the CEO of the WazirX cryptocurrency exchange of India, said that the 2018 restrictions issued by the Reserve Bank of India made it hard for citizens to trade their rupees for cryptocurrency or to exchange BTC to INR. Lifting the ban made this a lot easier. Some exchanges did manage to create some direct banking channels for rupee deposits and withdrawals. This is what has facilitated the P2P surge.
How Fast P2P Volume Is Growing
By August 2020, more than $135 million in United States dollars was traded across India’s P2P networks. That amount is growing by more than 33% each month. User signups are also increasing. The cryptocurrency exchanges don’t even have to advertise. People find out through word-of-mouth. There is a lot of positive sentiment around cryptocurrency in India, and that has grown as the COVID-19 pandemic has continued throughout the year. Cryptocurrencies have not seen the slump like other economic sectors and investments have.
People Like the Local Exchanges
The CEO of CoinSwitch, which is an exchange for cryptocurrency in India, pointed out that the P2P trading volumes of local exchanges are growing faster than other venues for trading. He thinks that is related to the large number of investors making small initial investments on a variety of exchanges. The P2P platforms don’t charge fees that eat into profits. This makes entry into cryptocurrency trading more accessible for people who aren’t rich. The middle class can now get their extra funds in the cryptocurrency exchanges.
Optimism Prevails in the Indian Cryptocurrency Exchanges
There is a lot of optimism around cryptocurrency in India. Despite the ongoing COVID-19 pandemic, many people believe that they can grow their money if they invest it in cryptocurrencies. That’s because out of all the major economic sectors lost money and lost jobs, but the cryptocurrency sector did not. For people who do not want to take a huge risk, cryptocurrencies are looking like a better investment every day. The fear of missing out is also a factor. People also see the lifting of the ban as a positive sign that the Indian government will authorize more use of cryptocurrency, which will help it go more mainstream. As more people and companies accept and use cryptocurrency in India, this will create a positive feedback loop of higher volume, but it could also boost volatility.
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