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What the new bis report says about indians and Their ‘Cryptic’ Allure


Cryptos have captured the attention of investors everywhere, so it is fascinating to observe adoption trends globally as well as in India. While there have been hazy accounts of it so far, thanks to a recent working paper put out by Bank of International Settlements (BIS) – ‘Crypto trading and bitcoin prices: evidence from a new database of retail adoption’, by Raphael Auer, et al, we have now a handy glimpse of recent travails of the allure of crypto-world.

The report does a detailed analysis on new user acquisition geographically, selling and buying patterns, holding analysis of ‘whales’ (holders of 1000-100,000 bitcoins) and ‘humpbacks’ (holders in excess of 100,000 bitcoins).

Distribution of India users

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Distribution of India users

The report analyses that the single most determinant factor for retail adoption has been price increase (not surprising), with new user downloads mirroring trends of bitcoin price changes with a lag of 2 months. 40% of global crypto retail users are males below 35 years. As bitcoin prices rose and smaller retail users were buying, larger holders (both ‘whales’ and, especially, ‘humpbacks’) were selling. Again, most of these findings are intuitive, but so are human emotions of greed and fear that have prevailed since time immemorial.

The paper also published the detailed database across all G20 countries, thus providing us some insights into the cryptic allure for Indians. Here’s what the report had to say about the data: “Sensor Tower gauges unique downloads per iOS or Google Play account. This methodology avoids double-counting due to re-downloads, ie if a user installs, deletes and then reinstalls the same app on the same device or a new device from the same iOS or Google Play account. An active user is defined as any user that has at least one session on an app over a specific time period (eg a day, week or month). “With this introduction to the data out of the way, here are some interesting insights from the data from an Indian point of view.

The Indian unique installs of various crypto-apps/transactions are close to 30 million users (data till June 2022). In FY22 alone, approximately 20 million new unique installs have happened. As a perspective, in FY22, 20 million new investors were added to stock markets (source: NSE) and about 12 million unique investors were added by the mutual fund industry (for 12 months ending June—suggestive that a nascent crypto industry went mainstream and sought the attention of many Indians—comparable to many other traditional investment avenues of stocks and mutual funds.

It is interesting to see how the new unique install share of Indian users have trended compared to other G20 countries. While the US has continued to have the lion’s share in adoption, four other countries have seen a significant rise in their market shares—South Korea, Turkey, Brazil and India.

The Indian market’s share of new unique installs has moved up from less than 2-3% pre demonetization to about 7-11% in the 12 months post demonetization. As bitcoin stagnated in 2018 and 2019, the market share also came back to 2-3% levels. And then the lockdown worked its magic on Indian adoption of crypto – rising up to 20% of global market share in July 2020, and since the end of the second Covid wave, the Indian market share in new unique installs have been in double digits.

And lastly, distribution of users basis the bitcoin price level when an app was first downloaded, suggests about 77% of Indian users have come in at levels higher than $20,000 per bitcoin.

While one doesn’t know the quantum of monies invested by Indians, and therefore the extent of losses—it is likely that close to four-fifthsof Indian users by volume and three-fourth of G20 (ex-India) users are sitting on losses. 60% of Indian users installed apps for the first time when prices of bitcoin were trading north of $40,000!

The crypto-world has displayed strong price moves, so maybe the current episode is just a blip, but it will be interesting to see the behaviour of these users – will they continue to HODL or will their patience run thin? Only time will tell….

Harish Krishnan is senior fund manager (equities) at Kotak Mutual Fund. This article does not offer any view on investment thesis or otherwise on crypto.

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