The current premium in India is more than three times that of South Korea’s famous kimchi premium, which is currently 1.6 percent.
On Indian markets, bitcoin was trading at around US$39,969, or US$2,169 higher than the worldwide average. Notably, which was at US$37,800 at press time.
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“Prices are higher in India because there is more demand for crypto than there is supply,”
So, said Sathvik Vishwanath, CEO of crypto exchange Unocoin, to Forkast. The price premium typically ranges from 2% to 5%, depending on exchange-specific trade volume, market efficiency, and attitudes.
India has announced a 30% tax on cryptocurrency income, allaying worries of a ban.
However, the Reserve Bank of India (RBI), the country’s central bank, has reintroduced the prohibition, putting a damper on the local cryptocurrency business.
Despite the increased demand, RBI governor Shaktikanta Das and his deputy, Shri T Rabi Shankar, openly denounced cryptocurrencies, advocating for an outright prohibition, as the central bank has done in the past. The RBI will contribute in the direction of national crypto rules, according to the finance minister.
The nature of the Indian rupee is another factor that contributes to the premium (INR). In India, higher transaction fees and high USD-INR exchange rates are additional factors driving up pricing.
Many emerging nations (such as India) use cryptocurrencies to protect their savings against currency depreciation, send and receive remittances, and conduct business transactions, according to blockchain forensics firm Chainalysis.
Crypto premiums have given arbitrage opportunities for investors in the past, most notably for FTX CEO. Then, and billionaire Sam Bankman-wealth Fried’s creation strategies in South Korea and Japan.
Due to the hassle and high transaction fees, arbitrage trading in the form of selling international Bitcoin in India’s premium market has not been a popular profit route among investors.
According to BitInfoCharts, Bitcoin transaction costs have reduced to an average of US$1.50 in recent days as prices have fallen. But, have risen to around US$60 in the past year.
Furthermore, an Indian investor intending to acquire crypto with Indian money may be unable to do so on international exchanges. That’s, because many of them do not take Indian rupees because they lack the infrastructure to convert them to crypto.
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