Why do crypto INR and USD prices vary?

As we write this post, the price of a bitcoin across the best cryptocurrency exchanges in India stands at $47,301.06, or ₹34,53,650. Because crypto exchanges operate differently from traditional stock markets, you see a slight variance in their pricing. This is completely unlike pricing on the NSE or BSE. Read on to understand why this variance exists across cryptocurrency exchanges in India.

What impacts the pricing of cryptocurrencies?

As of now, we know that there is no underlying asset that determines the prices of cryptocurrencies. For example, take bitcoin. There is a fixed total of 21 million coins, and around 18 million of them are already in circulation.

Once the remaining stock is mined, the pricing would depend solely on the market’s demand and supply. Like with any other instrument with limited supply, the higher the demand, the higher the prices. So at the end of the day, demand for cryptocurrency in India and worldwide often determines its price.

Reasons behind the varying INR and USD cryptocurrency prices

The variation you see is a common phenomenon and happens worldwide. The are several contributing factors:

Transactional complications

There is a tried-and-tested process to convert one fiat currency to another. But for INR to USDT to crypto? The process is not as seamless. Moving money across the best crypto exchanges in India or worldwide requires collateral and time, eliminating arbitrage profits.

Fees and taxes

Unlike equity shares transfer, which entails minimal fees and taxes, transferring cryptocurrency in India like Bitcoin comes with additional charges like margins, tax, and transaction fees. These are not as minimal as in the case of equity shares. 

In addition, there will be exchange rate differences that will further plummet the price you receive by selling your holding. So people do not tend to make profits by shifting from one exchange to another, allowing the variation to persist longer.

Trading volumes

The volume of trade directly impacts the price of a cryptocurrency prevailing in a stock exchange. So it is more likely that a large crypto exchange will have a higher volume, whereas a smaller one will have a different scenario altogether.

For example, let’s take Zebpay in India. There are 2,00,000 people interested in buying Dogecoin, whereas if we consider a US-based large exchange, more people are interested in trading in the same crypto. So it results in Dogecoin’s INR and USD price difference.

The crux

An investor must know the prevailing prices across cryptocurrency exchanges in India and worldwide before investing, but that cannot be the sole deciding factor. Every marketplace has its norms about exchange rates, margins, and more, and you must compare them all and then decide.

For example, ZebPay is one of the best cryptocurrency exchanges in India and is trusted by millions of people in the country. It is because we’re transparent about our processes and do not charge a bomb for every transaction.

Click here to start your cryptocurrency journey with ZebPay.

Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Each investor must do his/her own research or seek independent advice if necessary before initiating any transactions in crypto products and NFTs. The views, thoughts, and opinions expressed in the article belong solely to the author, and not to ZebPay or the author’s employer or other groups or individuals. ZebPay shall not be held liable for any acts or omissions, or losses incurred by the investors. ZebPay has not received any compensation in cash or kind for the above article and the article is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information.

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