Bitcoin – the largest cryptocurrency by market capitalization – trades on major Indian exchanges at a premium of around 5.7% to the global average.

India’s current premium is more than three times that of South Korea’s famous kimchi premium, which currently stands at 1.6%.

Bitcoin was trading at around US$39,969 on Indian exchanges, which is US$2,169 higher than the global average, which was US$37,800 at press time.

“Prices are higher in India because there is more demand for crypto than the amount of supply that exists in the country,” said Unocoin CEO Sathvik Vishwanath. Forkast. The price premium is typically between 2% and 5%, which varies based on exchange-specific trading volume, market efficiency, and sentiment.

India recently announced a 30% tax on crypto revenue, initially dispelling fears of a ban. But the Reserve Bank of India (RBI), the country’s central bank, has put the ban card back on the table, pouring cold water on the local cryptocurrency-starved industry.

Despite the higher demand, RBI Governor Shaktikanta Das and his Deputy Shri T Rabi Shankar publicly criticized cryptocurrencies, calling for an outright ban, which has been the central bank’s consistent stance. The Minister of Finance has confirmed that the RBI will participate in the direction of national crypto regulations.

“The price differences have widened over time as more and more Indians have started investing in Bitcoin. While the “buy-sell” price differences are true for all crypto assets, the irregularity is higher in the case of Bitcoin, due to its higher demand, massive trading volumes and undeniable popularity. said a CoinSwitch spokesperson. Forkastin an email response.

Another premium contributor is the nature of the Indian Rupee (INR). Higher transaction fees and high USD-INR exchange rates are also drivers of higher prices in India.

Blockchain forensics firm Chainalysis has found that many emerging markets (like India) are turning to cryptocurrency to preserve savings in the face of currency devaluation, send and receive remittances, and transact commercial.

“India is the second largest crypto adopter in the world and has outpaced most of the largest and most developed economies in the world. India is seeing increased demand from investors in the country buying crypto” , said Minal Thukral, executive vice president of growth and strategy at CoinDCX. Forkast in an email, adding higher deposit and withdrawal fees minimizes potential arbitrage opportunities.

In recent history, crypto bounties have presented arbitrage opportunities for investors, including the wealth generation tactics of FTX CEO and billionaire Sam Bankman-Fried in South Korea and Japan.

However, arbitrage trading in the form of selling foreign bitcoins in the Indian premium market has not been a popular profit channel among investors due to inconvenience and high transaction costs.

Bitcoin transaction fees have dropped to an average of $1.50 in recent days as prices have fallen, but have climbed to around $60 in the past year, according to data from BitInfoCharts.

“The price difference shouldn’t be a big concern for Indian investors because if they pay a premium to buy, they also sell at a premium,” said Bhagaban Behera, co-founder and CEO of Defy. Forkast.

Additionally, an Indian investor looking to buy crypto with Indian currency may not be able to trade on international exchanges as many of them do not accept Indian rupees as they do not have the mechanism to convert indian rupees to crypto. “For that you have to partner with banks and currently in India a lot of banks don’t want to participate due to lack of clarity. For that reason international exchanges stay out because they don’t have banking partners,” Behera said.

The price of Bitcoin is not always higher on Indian exchanges than on international exchanges, and varies depending on the local demand and supply of crypto in Indian rupees. The price is also dependent on a country’s crypto sentiment – ​​where a general negative attitude towards crypto drives Bitcoin prices down relative to its international peers.

If demand for bitcoin increases locally and globally, and if India is able to expand integration with global market activities, exchanges indicate that price differentials could even out.

“It’s not yet a very liquid market in India,” Vishwanath said. “Once it becomes a more liquid market, we may actually see fairer pricing for Indian investors.”

Indian exchanges also hope that once crypto regulations are clear and safe, more users will participate, allowing exchanges to lower their fees and reduce overall trading costs.