The Indian crypto market has long been connected to active trading and short-term bets. But now, the focus is slowly shifting as more wealthy investors begin to enter the space. High-net-worth individuals (HNIs) have started seeing crypto as a long-term investment rather than a trading option.

According to BitDelta India CEO Vikaas Sachdeva, HNIs and family offices have already begun allocating small amounts into crypto. He believes that if these investors continue to embrace crypto, it could eventually turn into a bigger shift toward long-term crypto investments in India.

India’s Crypto Story May Be Entering Its Second Phase

The latest reports reveal that India’s crypto market is moving beyond its trading-only phase. BitDelta India CEO Vikaas Sachdeva stated that the country could be entering a new stage. While digital assets were largely seen as a short-term trading option, Indian traders have now started viewing them more like an investment asset.

Adding more to his points, Sachdeva compared the current stage of the crypto market in India to where mutual funds were around 1995. As HNIs have already started crypto allocations, the market is now open to grow more.

Why Trading Has Dominated India’s Crypto Market

Notably, trading has been a critical part of India’s crypto market. This is mainly because of the sharp price movements of digital assets like Bitcoin. In India, many investors have seen crypto as a trading option. They think of making profits from short-term price swings. While the focus remained on short-term gains, long-term investments were out of focus.

In addition, the lack of a familiar investment framework has also played a major role in keeping Indian crypto traders focused on short-term trading practices. Other assets like gold, stocks, and mutual funds were considered a regular part of India’s investment space. At the same time, crypto is viewed as a new and speculative asset for trading.

HNIs Are Starting Small, But What Would Make Them Scale Up?

Although HNIs and family offices are showing interest in crypto, they are still taking a cautious approach. Instead of putting a large sum of money into digital assets, they are making only smaller allocations.

However, the HNIs’ crypto exposure could significantly grow if the government brings regulatory clarity, sparking better understanding, enhanced investment products, and more confidence in the Indian crypto market.

The Missing Piece: A Familiar Investment Framework

It is worth noting that the biggest challenge the Indian crypto market is facing is the lack of a comprehensive investment framework. Although Indian investors have a good understanding of investment options like stocks, mutual funds, gold, and bonds, crypto investment is still a new concept for many.

For Sachdev, Indian investors should be provided more crypto education. Rather than focusing only on price movements, he stated, investors should start seeing crypto through more concepts like portfolio allocation, risk management, and long-term investing.

Can Crypto Really Sit Beside Equity, Gold and Debt?

Significantly, crypto could eventually become another investment asset. However, it is unlikely to replace traditional investment options such as equity, gold, or debt. Considering the volatility of cryptocurrencies, Sachdeva suggests that investors should start exploring crypto with only small allocations. This means that crypto should be treated as a smaller part of a diversified portfolio.

India’s Tax and Regulatory Structure Remains the Friction Point

Another major point to note is India’s tax and regulatory framework. As India’s crypto regulation mainly focuses on tax policies and anti-money laundering rules, investors still face uncertainty in broader regulatory areas.

Especially, the tax policy makes crypto trading less attractive in the country. The government imposes a 30% tax on crypto gains and a 1% TDS on every transaction. For HNIs, larger allocations may remain limited unless the government introduces clear rules.

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From Crypto Traders to Crypto Allocators: What Changes Next?

Interestingly, investor behavior could see a massive change if the Indian crypto market continues to shift from short-term trading to long-term investment. They will start moving their attention from daily price movements to how crypto could be held in their portfolios over a long time.

HNIs will also reflect this change. They will increase their crypto exposure. As HNIs become more comfortable with the asset, they will concentrate on managing risk, choosing assets, and taking a longer-term approach.

Amid this shift, Indian investors should closely watch further developments in the country’s crypto regulation. They should also analyse institutional participation, new crypto investment products, and the growing integration of TradFi and digital assets. These developments could decide the future of the crypto market in India.

Related: India Has Millions of Crypto Users—So Why Does the Government Hold Zero Bitcoin?