December 5, 2021

Tether Drops On Indian Exchange Platforms, Investors Buy Dip

Due to fresh regulatory uncertainties, Tether (USDT), the world’s biggest Stablecoin in terms of market capitalization, has been unstable in Indian markets. And as a result of the price volatility, astute traders’ profit.

According to the present Dollar-Rupee or USD/INR currency exchange, the cryptocurrency introduced to assist decrease instability linked with other crypto assets should consistently be valued at $1 or rupees (₹) 74.37.

Nevertheless, on Tuesday, USDT fell to as low as ₹60 on the Mumbai-based WazirX market, while remaining pegged to the Dollar at a 1:1 ratio on western platforms.

The shift came after a Lok Sabha (lower house of parliament) newsletter stated that the Cryptocurrency and Control of Official Digital Currency Act, 2021, which seeks to outlaw all unregistered digital currencies, might be addressed during Parliament’s upcoming winter session, which begins on Nov. 29.

Gains By Individual Traders

Some speculators took full advantage of the underpricing and purchased Tether at a reduced price. Swarang Tanksali told CoinDesk via WhatsApp that there was an opportunity for profit in purchasing USDT at ₹60 and selling it at the peg or discount. He stated that he bought Tether at ₹62 on the CoinDCX market.

Tether was trading on Indian exchanges for around ₹74 at the time of publication, per data source gadgets.ndtv.com.

According to MintingM, an India-based crypto wealth management business, many dealers were unable to enjoy the benefits of the mispricing since a rapid surge in trading volumes in response to regulatory news caused technical issues on key exchanges.

As stated by Mudit Gupta, a blockchain security consultant, individual traders are mostly taking full advantage of the undervaluation. “Because crypto is in the murky region [in terms of legislative certainty], no significant market maker handles it in India,” Gupta remarked in a Twitter conversation.

While Tether has rebounded to trade roughly in line with the USD/INR currency rate, it remains below the pre-crash price of ₹80. Due to significant demand, Tether often trades at a premium of roughly 5% on Indian marketplaces.

It Wasn’t The First Incident

Tether saw a comparable crash in late January, plummeting from ₹80 to ₹61 after the then-Lok Sabha newsletter highlighted the bill to prohibit virtual currencies as part of the administration’s parliamentary objective.

The legislative draft to be submitted in the winter session appears to be much like the one in January. The law aims to prohibit private digital currencies while encouraging the construction of a digital rupee to be issued by the Reserve Bank of India.

Nonetheless, Tether, alongside Bitcoin and famous meme currencies like Dogecoin and Shiba Inu, collapsed. The marketplace reaction shows that previous media stories about the government relaxing its attitude towards cryptocurrency had raised anticipation for more lenient language in the law.

The bill’s specifics are not publicly available. WazirX head Nishcal Shetty informed CNBC TV-18 early this morning that the meaning of the term “private cryptocurrency” used in the law is unclear. Gupta went on to say that legislators are opposed to digital currencies that conflict with the Rupee.