Home / Markets / Cryptocurrency /  This is how Indians invested in cryptos during the record rally of 2021

The record-breaking rally in cryptocurrencies not only saw retail investors flock the market in 2021 to capture some of the wild gains, but it also witnessed widespread acceptance by high net-worth individuals, institutional investors, and corporates.

While retail investors were the first off the block to dabble in cryptos, investments in the digital asset class by the likes of Tesla, PayPal and MicroStrategy tell a different story with even governments sitting up and taking note of it—cryptos are here to stay and are likely to redefine the financial system as it comes of age.

Meme coins, central bank digital currencies, metaverse, and non-fungible tokens (NFTs), were the flavour of the year, said experts.

Hitesh Malviya, founder, itsblockchain.com, a cryptocurrency publication, said 2021 will be remembered as the year of mainstream cryptocurrency adoption. “India added more than 90% of its current retail investor size this year. Meme coins dominated the first half with dogecoin pulling off a massive price rally. Shiba Inu, among other meme coins, also followed the lead of dogecoin in the second half."

According to homegrown exchanges, such as CoinDCX, BuyUcoin and WazirX, the most traded crypto assets were bitcoin, ethereum, tether, shiba inu, dogecoin, WazirX token, matic, ripple, cardano and solana. The majority of the trading volumes was dominated by bitcoin, showed an analysis by WazirX. Interestingly, women traded more in bitcoin, while men chased shiba inu.

Furthermore, an analysis of investment patterns by BuyUcoin revealed that out of every 100 invested on its platform, 50 backed bitcoins, 35 went to ethereum and 10 for shiba inu and dogecoin combined; the rest was shared by other coins.

The most held crypto asset on BuyUcoin was ethereum with an average investment of above 40,000.

Sumit Gupta, chief executive and co-founder, CoinDCX, said Indians have traditionally had a low-risk appetite. “It is reflected even in their crypto investments with the majority buying major tokens such as bitcoin and ethereum, which have the largest share in market capitalization. Some other altcoins such as dogecoin and shiba inu also attracted Indians on different occasions," said Gupta.

The bull run in cryptocurrencies ever since the ban on trading in the asset class was lifted by Reserve Bank of India (RBI) in March 2020 was exponential, with Indian exchanges clocking record user additions and trading volumes. WazirX witnessed a record trading volume of over $43 billion, growing 1,735% year-on-year in 2021—the highest in India.

As per a survey conducted by the exchange, 51% of respondents admitted to investing in cryptos following recommendations by friends and family. Nearly 1% of the 8.5 million users of WazirX were part of the survey.

WazirX said 44% of the respondents had invested up to 10% of their overall portfolio in crypto. Besides, the lure of astronomical returns cannot be ruled out as a possible factor behind the widespread adoption of crypto assets.

According to CoinGecko, a digital currency price and data platform, bitcoin was up 68% and Ethereum 441% on a year-to-date basis, while dogecoin has surged 3,596% and shiba inu 43,949,900%.

Long-term investors who started buying crypto between 2020 and 2021 on BuyUcoin, are sitting on massive gains. “But, the average gain on liquidated portfolio remains to be in the range of 45-55% for investors with quarterly holding periods and 15-25% for monthly holders and recent investors," said Shivam Thakral, chief executive officer, BuyUcoin.

Abhinav Kaul
Abhinav Kaul writes on cryptocurrencies and mutual funds at Mint. His previous stints include ETMarkets, Reuters Bangalore and Press Trust of India.
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