Many Indian investors have been investing in Bitcoin over the years. After recording a high, the cryptocurrency dipped by about $10,000 and was trading at about $ 47,000.
“February 22, 2021, over 2 billion dollars of bitcoin moved for an old address to book profits, which also brought some correction in the market,” said Kumar Gaurav, founder and CEO, Cashaa, an online banking platform for cryptocurrency.
Insiders said some of the Indian investors were already selling their crypto assets in the last few weeks.
“With every increase in Bitcoin price, there comes selling pressure from other long-term investors as well. $50,000 seemed to have been that historic price point where a lot of old Bitcoin holders decided to liquidate,” said Nischal Shetty, CEO, WazirX, a cryptocurrency exchange.
Many investors bought Bitcoins and other cryptocurrency around April last year and have seen their investment grow manifold.
However, the returns may be short lived as the tax department is already looking to demand their share in the returns.
The government is looking to ban all private Cryptocurrencies such as Bitcoin and Ethereum through the proposed Cryptocurrency and Regulation of Official Digital Currency Bill, 2021. The government’s announcement has had an impact on several investors too, several persons in the know, said.
February has been a turbulent month for several Indian investors and many of them have been selling off their assets or booking profits, exchanges said.
“There was a brief selloff around February 1 when the bill was announced, but since then activity has returned to normal and then some. In fact, we are seeing our highest volumes ever, balanced between buying and selling,” Vikram Rangala, chief marketing officer, ZebPay, another Cryptocurrency exchange.
Tax experts said that those who have sold their crypto assets will have to cough up income-tax as high as 42%.
“Any gains on capital assets held for investment purposes attract income tax. Accordingly, if transfer of crypto assets results in any kind of profit, it will attract income tax,” said Rashmi Deshpande, partner, Khaitan & Co, a law firm.
Many exchanges feel that the sell-off could just be a blip on the radar and despite the government’s intention to ban them in India or even the global undercurrents, Cryptocurrency is now being perceived as a long term investment.
“We have also observed in the past 2-3 years that there is innate belief from agile investors who see Bitcoin as a store of value like gold and want to continue holding it till Bitcoin becomes mainstream as digital gold,” said Shivam Thakral, CEO, BuyUcoin, a Cryptocurrency platform.