Large Institutional transactions form 42% of the total transaction volume.
Chainalysis one of the premier blockchain analytics and forensics has observed in its research that India has high levels of crypto adoption.
India’s Position in Crypto Adoption
India ranks 2nd in the world in the overall Chainalysis Global Crypto Adoption Index. It means the country has high levels of grassroots adoption.
The country also ranks 2nd in On-chain Retail Value Received.
Moreover, it ranks 6th in Global DeFi Adoption Index.
India’s cryptocurrency market has grown by 641% in the past year.
India’s Investment Pattern
India has 59% of the activity taking place on DeFi Platforms and the rest 41% on the Centralized Platforms by cryptocurrency value received.
It is quite surprising to see that more value was sent to DeFi protocols than centralized services.
It is also corroborated by the observation that the biggest chunk of crypto activity is in ETH and wETH which are primarily used in DeFi transactions.
The breakdown of the share of transaction volume by transaction size shows that 42% of the transactions in India were Large Institutional sized transactions. A Large Institutional transaction has $10 million or more in value.
So, a bulk of transactions from India based addresses have a size of over $1 million. Retail transactions form around 30% of the total.
We do not have the data about the specific investment pattern of institutional transactions; there could be different patterns. It might be observed that retail transactions are more in Centralized Exchanges and institutional transactions in DeFi or vice-versa.
But it is clear that the institutional market is playing a key role in India’s crypto investment ecosystem. It is reminiscent of a mature market.
Possible Reasons for Adoption
John, Principal at cryptocurrency investment firm LedgerPrime, believes that there was a stigma associated with cryptocurrency and illicit activities which it finally got rid of and people have started to adopt it.
“In 2014, if you were at a VC event and said you were in crypto, you might have someone coming up to you later in the evening asking if you could get them drugs online. Now, crypto has become the cool place to be.”
He added that assets like real estate are witnessing diminishing returns, pushing people towards crypto investments.
Moreover, India’s large freelance workforce is receiving payments through cryptocurrency due to its ease. Also, entrepreneurship in the crypto space has increased.
Krishna Sriram, Managing Director at Quantstamp revealed that “independent freelancers working for overseas employers have started requesting to be paid in cryptocurrency. It’s a very bottom up way of adopting.”
Sriram also cited the importance of the emergence of “cryptocurrency media and influencer ecosystem” which is educating and spreading awareness about digital assets.
India might see crypto-related legislation in the coming few weeks. The bill for the legislation created a temporary uproar that tanked the markets but recovered soon. Regulation of the industry might attract more retail investors.