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Crypto crash: No signs of panic selling, Indian investors holding on or buying the dip

Cryptocurrencies saw a massive fall on January 21 after the US Federal Reserve's decision to hike rates by March spooked global markets.

January 24, 2022 / 05:32 PM IST
(Image Courtesy: Shutterstock)

(Image Courtesy: Shutterstock)

Even as cryptocurrencies saw a free fall over the past few days, Indian investors are staying put or even looking to buy amid the panic across stock markets and cryptos globally. The experts say that retail investors and token investors are now looking to accumulate rather than sell.

The massive sell-off in cryptocurrencies was led by concerns over the United States Federal Reserve’s decision to hike rates as early as March and the Russian central bank’s proposal to ban the use and mining of cryptocurrencies in the country.

Bitcoin is trading at 45 percent lower than its peak, and Ethereum is down 46 percent. Meme coins, where Indians have invested heavily, have taken a bigger hit over the past few months with Dogecoin plummeting 78 percent and Shiba Inu down around 73 percent from their respective peaks.

Stock markets globally too saw a sharp sell-off based on the US Fed’s hawkish stance. Experts are seeing increased interdependence among cryptos and the behaviour of global traditional markets due to the substantial investments of institutional investors in cryptocurrencies.

While retail investors are worried about what this will mean for cryptocurrency prices in the long run, India is not seeing heavy selling activity. Experts add that memecoins are the most impacted during such times since they do not have any underlying value.

Ashish Singhal, founder, and CEO of crypto exchange CoinSwitch said, "We have not seen any significant change in user behavior on our platform. Today's investors are digital savvy, and since many users on our platform are retail investors, they have seen similar dips and recovery in the past."

The platform, which is one of the largest in India, in fact, continued seeing new investors buying to make the most of the dip in prices. After prices started dipping on January 21, the platform said it registered a two-fold increase in the number of users buying as compared to its daily average.

85 percent of the platform’s users bought cryptos on January 21 and the trend continued over the next two days as well, CoinSwitch said. India had 15 million crypto users in 2021, and CoinSwitch claims to have a user base of 14 million.

"Like any asset, macroeconomic factors affect the crypto too. Investors must keep in mind that risk and reward go hand in hand and that they need to do their own research before buying into any asset — not just crypto,” Singhal added as a word of caution to investors.

Sathvik Vishwanath, co-founder, and CEO of Unocoin said that the platform has not witnessed any extreme swing in investor behaviour post the crash.

“The correction was anticipated and this is a global impact. We are definitely not seeing any panic selling, and as a result, there is not much buying either. Only 25-30 percent of investors are buying and selling on our platform,” said Vishwanath.

A Twitter poll on how investors are reacting to the crash by crypto investor and educator and founder of BitInning, Kashif Raza, also showed a similar trend. At the time of publishing this story, Raza’s Twitter poll had over 1,200 responses of which 50 percent said they are holding on to their investments at the moment.

36 percent said they are buying more and only nine percent of respondents said that they sold after the crash.

However, the behaviour on other platforms is a mix. Gaurav Dahake, the CEO of crypto exchange Bitbns said, “We are seeing more selling than buying currently. Overall new buyers have reduced in the past month because parts of global markets are on a break for Christmas, New Year, and then the Chinese New Year.”

The experts say that the investors following the market for a few years now have seen many such cycles and have built more confidence over the market. “The dip is also not because of crypto factors but overall there is a correction going on,” says Aman Sanduja, founder of Moving, a crypto knowledge community platform.

He adds that while new entrants or young investors are concerned over the dip and are learning the risks about it, the overall market has not seen much churn this time.
Priyanka Iyer
Sanghamitra Kar