India's wealthy investors turn to crypto assets as traditional markets stagnate

Mumbai: India's wealthy are increasingly taking a shine to crypto assets, a global favourite these days, as they see limited scope for appreciation in traditional favourites like stocks and gold at this point. Domestic affluent investors, who have been adding these virtual currencies to their portfolios since the election of the US president Donald Trump in November last year, have ramped up their holdings of late, a stark contrast to their position last year when they were reluctant to test out these new-age assets.

"Over the last 6 months, we're seeing clear momentum from HNIs and family offices who are now allocating a portion of their portfolios to digital assets," said Atul Ahluwalia, vice-president, HNI & institutional investments at CoinSwitch. "The conversation has moved from 'why crypto' to 'how much and where'." Bitcoin, the most popular cryptocurrency in the world, made a lifetime high after it crossed $120,000 earlier this week, jumping over 90% in the past year.

Agencies

While Trump's strong support for cryptocurrencies was the trigger for the renewed bull wave in this asset class, investors' search for alternatives to expensive stocks, record-breaking gold and volatile bonds has fuelled their demand.

"The limited availability of attractive investment opportunities and heightened volatility in India's secondary markets have further driven HNIs toward digital assets," said Pranjal Agarwal, India market head at Mudrex.

A high-net-worth investor in cryptos is classified as having an average holding of ₹50 lakh-₹1 crore or above in these assets. There is no centralised data on how much money worth of cryptocurrencies are traded in India as they are unregulated. For CoinDCX, a domestic crypto exchange, almost 50% of its total trading volumes come from its 3,500-odd large investor base comprising HNIs, family offices, and institutions. The average contribution of these investors in our monthly trading volume on our spot markets is ₹50 lakh or more," said CoinDCX's co-founder Sumit Gupta. "Notably, our institutional and family office clientele has grown by 50%, underlining the rising conviction among serious investors." CoinDCX had a monthly spot trading volume of $275 million in the month of June.

Cryptocurrencies emerged as an alternative to traditional money since 2009. Their rise reflects growing demand for digital assets amid distrust in conventional financial systems.

“Crypto is increasingly viewed as a non-correlated asset, particularly valuable amid ongoing global macroeconomic volatility,” said Harish Vatnani, head of trade, ZebPay. The most popular cryptocurrencies globally today are Bitcoin and Ethereum, which remain key choices for investors seeking exposure to crypto. Even in India, HNIs have stuck to the most liquid. Mudrex’s Agarwal said Bitcoin, Ethereum, and Solana consist of about 70% of the platform’s HNI portfolios.

Bitcoin has outperformed both US and Indian benchmarks by a wide margin. While bitcoin prices are on course to double, the Nifty is up 2.q5%, the S&P 500 has gained 11.3% and the Nasdaq Composite has advanced 12.5% in the past year.

India topped global crypto adoption for the second year in 2024, according to Chainalysis, with 119 million investors, which is nearly one-fifth of all crypto holders worldwide.

The US ranked second with 53 million investors, followed by Indonesia with 39 million, CoinLedger data showed. Himanshu Maradiya, chairman, CIFDAQ, a digital currency trading platform, said the growth in the participation of affluent investors in cryptos is a global trend.

“Retail investors dominate crypto exchanges in user count, making up 90-95% of users, but contribute only 30-50% of trading volume,” said Maradiya. “HNIs and institutions, though fewer in number (4-10%), drive 50-70% of turnover due to larger trades and frequent use of derivatives.”