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The euphoria around cryptocurrencies seems to have faded in India and the introduction of 30% tax is one of the reasons behind it.
MFDs who keenly follow the asset class say that the recent slump in prices, Terra Luna crash, banks blocking transfer of funds to crypto wallets, regulatory uncertainty and concerns due to exchanges shifting base to other countries have together led to a gloom in the Indian crypto market.
Terra Luna, one of the top 10 cryptocurrencies by market capitalisation until a few weeks back, crashed recently and in the process wiped out $400 billion of investors' wealth. Its price went down by almost 100% within a few days’ time.
The slump in investor confidence has reflected in trade volumes as well. In the last few months, multiple experts and media reports have stressed on the fact that crypto trading is down significantly, even halving for some exchanges as opposed to the good times before the Budget announcement (when government imposed a 30% tax on profits from crypto trade).
End of the road for cryptos in India? Here’s what MFDs and RIAs have to say
The craze may have gone down due to a series of troubles, but cryptos are not going anywhere, believe MFDs who have been recommending cryptos to their clients.
Mumbai MFD Naman Dhamija feels that his clients are unperturbed by the recent upheaval in the crypto markets. He said that instead of worrying over the losses, some of his clients have been seeking his go ahead to invest more in the asset class.
RIA Vishal Dhawan of Plan Ahead Wealth Advisors believes that his clients are also showing greater interest in cryptos after prices slipped. “They see the correction as an opportunity to jump on crypto bandwagon,” he said. However, Dhawan said that he has always refused to advice on cryptos as RIAs are not allowed to recommend unregulated investment products.
Udaipur MFD Rahul Jain, who was once a consultant to CoinSwitch Kuber, said the asset class is still a favourite for a section of millennials, who see cryptos as a tool to make quick money and ultra HNIs who have the capacity to take high risks.
There's another reason why cryptos are likely to stay longer — utility. Kolkata MFD Rajesh Koratia feels that not all crypto buyers see the digital currency as an asset. According to him, many people use it for money transfer as it is a cheaper and a faster alternative to bank transfers, especially for international transactions.
