What Indian Experts Are Saying About the Bitcoin Surge

Bitcoin, the first decentralised, most famous and successful cryptocurrency, which is also a bellwether for the crypto market, has snapped out of its bearish phase in months, prompting analysts to look at the reasons behind this surge and what it means for investor sentiment worldwide as well as in India.

The drivers of this rally are many and one of them is that big investors, which typically and historically include asset managers and pension funds, have been buying more Bitcoin through exchange trade funds (ETFs), which are special investment funds -- meaning they can buy Bitcoin, which is a synonym of cryptocurrencies because of its accounting for close to 60% of the global crypto market cap, without dealing directly with exchanges. Similarly, a large number of bulls are now being forced to buy Bitcoin back to offset their losses.

Like investors elsewhere, Indians, too, are feeling more confident about putting cash into Bitcoin. Most importantly, since the price broke through certain “resistance” points (meaning price levels it had struggled to pass before), it triggered a wave of buying from traders who are taught and trained to follow these patterns.

As they say, thanks to multiple reasons, buying ends up feeding on itself with rising prices attracting more buyers, which, as a result, pushes prices even higher – it is like a chain reaction.

Minal Thukral, Executive Vice-President, Growth & Crypto Business Head at CoinDCX, India's largest cryptocurrency exchange, offers his analysis on this development – of Bitcoin crossing the $85,000 mark and what this rally signals for the crypto ecosystem. He tells Open, “Bitcoin went from around $82,000 to above $85,000 in a few hours. The rally had started before the liquidations. U.S. spot Bitcoin ETFs took in around $593 million across Thursday and Friday. Oil fell and equity futures rose. The move then entered a crowded short zone. More than $300 million of shorts were liquidated in one hour, forcing those traders to buy Bitcoin back as the price rose.”

About the overall sentiment, he adds, “Altcoins moved with it. SUI and NEAR (cryptocurrencies) gained more than 20%, while RENDER and AVAX rose around 17% to 18%. AKE was the clear outlier on the downside, falling around 54%. JUST fell about 1.5%, and most large crypto assets were green.”

According to him, if the Bitcoin dominance continues, investors building long-term exposure can split their spot allocation over several purchases. “Active traders may use futures to hedge or express a shorter-term view. After a 5% intraday move, position size, collateral and the liquidation level matter as much as getting the direction right,” he avers.

For his part, Bengaluru-based crypto enthusiast and technology columnist Sreejith Sreedharan explains that Bitcoin's latest climb above $85,000 comes as the regulatory climate around crypto in the United States becomes more welcoming, even after the much-awaited CLARITY Act stalled. Recently, two of the major regulatory bodies in the U.S., the SEC and the Commodity Futures Trading Commission (CFTC), moved toward clearer rules for different types of crypto assets and transactions, he adds. These developments are encouraging signals for Bitcoin and the broader crypto ecosystem, Sreedharan argues.

Artificial intelligence (AI) may be another piece of the story behind the current crypto rally, according to Sreedharan. “The enormous enthusiasm surrounding AI may be encouraging some investors to look beyond the most crowded technology trade. As some AI investors become more cautious, Bitcoin offers another highly liquid asset where large gains are still possible. Then there is the market's broader appetite for risk, which appears to be increasing. U.S. equities rallied, oil prices eased and Treasury yields declined,” Sreedharan tells Open. He, however, offers a caveat, “It seems less about sudden faith in digital money and more about hedging risk and diversification. A combination of all these factors helps explain the rally better than any single headline.”