Does anyone know why bitcoin price is always trading at a premium of about Rs.3 to 4 lakh on Indian Exchanges vs on International exchanges. Does indian exchanges like WazirX, Zebpay, Coinswitch manipulate the prices as market makers ?
@nithin sir, maybe you know if these Indian crypto exchanges can act as market makers or not, to manipulate the prices ?
Why dont u buy in the internation market and sell it in indian market ?
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Unfortunately there is no derivatives market for Bitcoins in India. (And even if there was, both the exchange’s expiry day must fall on the same date).
As far as I know, most crypto exchanges end up being market makers in India. When you’re executing a crypto transaction on an Indian exchange- chances are that there’s no actual transaction taking place on the blockchain. It would simply be unviable, given the transaction costs and small ticket sizes for most Indian investors. Usually, the exchange holds the crypto in its wallet, and gives you ledger credits/ debits at prices that are benchmarked to the international price of crypto (usually with a small spread to compensate them for the risk). As can be expected, these spreads are usually much larger is illiquid altcoins than they are in, say bitcoin or ethereum.
I’d also like to point out- you don’t actually own any crypto until you transfer your coins out from the exchange to your own wallet (As the old crypto adage goes: “Not your keys, not your coins” ). Until you transfer to your wallet, any crypto you’re holding on the exchange is just a ledger entry on the exchange’s balance sheet - i.e- an assurance by the exchange that it owes you X coins. You don’t actually have custody of your coins until you control your keys, for which you need to transfer the coins to your own wallet.
Lastly, there’s always a difference in crypto prices in the US exchanges as compared to asian ones. This is because most transactions in the US are conducted in US dollars, while most transactions in other countries (and especially in Asia) are conducted in the stablecoin tether (USDT).
Although USDT is theoretically supposed to be backed by an equal reserve of US dollars and track the value of the US Dollar 1:1, there have been several questions raised on the sufficiency of tether’s Dollar reserves. (see here, here, and here). Given this, crypto sellers in Asia usually ask for a slightly higher price, to cover for the risk of getting USDT in return, instead of government-backed fiat currency. As such, crypto prices denominated in USDT always tend to be slightly higher than those denominated in US dollars.
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Very well explained sir.
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Depending on the country and the crypto exchange, the cost of cryptoassets may vary.
For example, in South Korea, bitcoin is on average $ 400 more expensive than in the United States, and the difference between selling and buying can range from $ 1,800 to $ 3,000. In India, a bitcoin seller is offering currency at a price 20% higher than what is set in the US market. The difference in the price of selling and buying bitcoin in India is about $ 1000. In China, the bitcoin rate is $ 100 higher than in the United States, and the cryptocurrency is bought and sold with a difference of around $ 500.
Bitcoin price is formed based on supply and demand for it. In other words, the price of the world’s first cryptocurrency is a balance between the price offered by sellers and the price that buyers are willing to pay.