Crypto market veterans say the $2 trillion correction reflects tightening global liquidity. File Image/Reuters
As the global cryptocurrency market erased nearly $2 trillion from its October peak, India’s leading crypto platforms say the correction reflects tightening global liquidity and equity-market stress rather than a structural breakdown of digital assets.
Bitcoin deepened its losses on Tuesday, sliding as much as 2.64 per cent to $62,858 in Asian trade before steadying near the $63,000 level. The move leaves the world’s largest cryptocurrency down more than 19 per cent for February, putting it on track for its steepest monthly decline since June 2022, when the collapse of TerraUSD set off a chain reaction across the digital-asset industry, toppling Three Arrows Capital and lender BlockFi.
Bitcoin is also heading towards a fifth straight monthly drop — its longest losing streak since the post-ICO shakeout of 2018.
Sentiment has weakened after Donald Trump outlined plans to raise global tariffs to 15 per cent, rattling equity markets and prompting investors to trim exposure to higher-beta assets, including cryptocurrencies. With bond yields elevated and dollar liquidity tight, Bitcoin’s growing correlation with technology stocks underscores its evolution into a macro-sensitive asset class rather than a peripheral speculative trade.
In separate interactions with Firstpost’s Dheeraj Kumar, Vikram Subburaj, CEO of Giottus; Ashish Singhal, Co-founder of CoinSwitch; and Nischal Shetty, Founder of WazirX, laid out how Indian investors should interpret the drawdown, and how exchanges must respond.
Edited excerpts:
The global cryptocurrency market has shed roughly $2 trillion since its October peak, with Bitcoin down over 50 per cent. How should retail and institutional investors in India interpret such deep corrections?
Vikram Subburaj: Indian investors should read this through a macro-liquidity lens, not as an isolated crypto event. Global crypto market capitalisation peaked around $3.8-4 trillion in October 2025 and fell to roughly $1.8-2 trillion by early February 2026. Bitcoin corrected from about $73,000-74,000 to the $35,000-38,000 range.
During this period, US equity volatility rose, bond yields stayed elevated and dollar liquidity tightened. Crypto now behaves like a macro-sensitive asset class. Corrections of this magnitude are part of that maturation process, not an aberration.
For retail investors, this underlines the risk of leverage and poor timing. Institutions typically view such drawdowns as liquidity resets where excess leverage is flushed out and risk premia recalibrate.
Ashish Singhal: Corrections are normal across markets. Crypto is young and global, so volatility is sharper. This cycle has coincided with declines in US tech stocks, commodities and other risk assets amid macro uncertainty and tighter financial conditions. It reinforces the need for a long-term, disciplined approach.
Nischal Shetty: The crash shows crypto is deeply tied to global liquidity and equity cycles. When equities sell off, institutions trim crypto exposure. Correlation between Bitcoin and the Nasdaq has been high.
For Indian retail investors, the 30 per cent tax on virtual digital asset gains — without loss offsetting — makes corrections more punishing. Exposure should be measured, with a focus on blue-chip tokens over speculative altcoins.
What should exchanges do during such volatile cycles to manage liquidity and reduce panic selling?
Subburaj: Exchanges must act as risk utilities, the first responsibility during volatile phases is market hygiene, not marketing. Conservative leverage caps, dynamic margining and close monitoring of order-book depth are critical. In recent cycles, liquidation cascades were amplified by excessive leverage, not spot selling.
Education is equally important. The major drivers of disorderly selling are confusion and lack of clarity. It is not always price alone.
Another important point is that exchanges also need to honestly frame crypto. Bitcoin and large-cap digital assets now react to macro signals. However, crypto also retains long-duration optionality tied to adoption and infrastructure growth. If users understand this duality, volatility becomes something to manage rather than fear. In that sense, education and risk controls are as critical to market stability as liquidity itself.
Singhal: In volatile markets, basics must work flawlessly — deep liquidity, tight spreads and stable systems. When platforms fail, panic accelerates.
Clear, proactive communication also matters. Silence breeds rumours. Exchanges must focus on risk awareness, position sizing and diversification rather than selling crypto as a quick win.
Shetty: In periods of heightened volatility, platform disruptions, or major operational events, exchanges must take proactive steps to reduce emotional decision-making, and reinforce crypto’s evolving identity as both a high-beta technology asset and a potential long-term investment.
Consistent communication reduces fear-driven decisions. Traders must understand temporary spreads, slippage and thin order books. Beginners should limit crypto exposure to 1-5 per cent of their portfolio and adopt systematic investing to average risk.
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US Federal Reserve Governor Christopher Waller recently suggested that the crypto market’s recent weakness reflects fading post-election optimism and the failure of legislation. How do political narratives, regulatory uncertainty, and growing mainstream financial exposure in the US or elsewhere shape investor behaviour in India?
Subburaj: Over the past two years, analyst data show a clear trend: legislative momentum in the US — such as ETF approvals or pro-innovation policy drafts — has typically brought capital inflows and lower volatility in crypto markets. Delays or political reversals, by contrast, have triggered swift de-risking.
Indian investors, though governed by a separate regulatory regime, are not insulated from these shifts. Capital flows and risk appetite are now globally synchronised, with policy signals from Washington quickly influencing sentiment in domestic markets.
Meanwhile, rising institutional participation through ETFs, custodians and trading desks has pushed crypto firmly into the mainstream. It now trades more like a high-beta tech asset — sensitive to elections, central-bank rhetoric and geopolitical events. For Indian participants, the key is to distinguish between short-term, narrative-driven swings and longer-term structural trends.
Singhal: Political narratives and regulatory signals in major economies like the US have a direct impact on global crypto sentiment, including in India. Markets often price in optimism around policy shifts, and when legislative momentum stalls or uncertainty rises, it leads to short-term corrections.
For Indian investors, this reinforces the reality that crypto is now a globally interconnected asset class, influenced by macro policy, geopolitics, and institutional capital flows. At the same time, growing mainstream financial exposure is increasing crypto’s correlation with broader risk markets.
Shetty: When a leader like Christopher Waller says crypto is falling because political excitement faded and laws didn’t move forward, he’s basically telling us that markets run on stories as much as numbers. In simple terms when regulations are unclear, investors everywhere, including in India, become cautious. And because global capital is connected, what happens in US politics and Wall Street sentiment quickly influences how Indian investors think, allocate, and react.
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Blockchain analytics suggest that countries under sanctions, such as Iran and Russia, are increasingly using crypto and stablecoins for cross-border fund transfers, sometimes for state-linked activities. How can platforms in India and globally balance enabling legitimate cross-border crypto usage for retail and institutional investors?
Subburaj: Let us be clear on this. For Indian exchanges, the starting point is a solid compliance architecture. Cross-border crypto usage is legitimate when it sits within clearly defined guardrails. Those guardrails, in India, are anchored to FIU-India registration, AML/CFT obligations, and alignment with FATF (Financial Action Task Force) standards. Any discussion on misuse by sanctioned jurisdictions must be separated from how compliant platforms enable lawful activity.
Crypto’s transparency is often misunderstood. Public blockchains, when paired with regulated on-ramps and off-ramps, can actually enhance oversight rather than weaken it. For Indian platforms, enabling cross-border use responsibly is less about geopolitics and more about disciplined compliance with the law.
Singhal: In India, crypto is currently classified strictly as an asset and not as a currency or legal tender, which means cross-border usage remains a regulatory grey area. Platforms therefore have a responsibility to implement robust KYC, AML, and transaction monitoring systems to prevent misuse while enabling legitimate applications.
Until clearer regulatory guidance emerges, Indian retail investors should exercise caution and adhere strictly to domestic compliance norms when engaging in cross-border crypto transactions.
Global alignment with FATF norms, including the Travel Rule, has strengthened transparency. Since 2023, Indian VASPs (Virtual Asset Service Providers) have been required to register with FIU-IND and implement robust KYC and AML systems, bringing crypto closer to traditional financial compliance standards.
Shetty: A private, rupee-backed stablecoin and the RBI’s central bank’s digital currency (CBDC) need not be rivals — they can serve distinct purposes. While the CBDC fits traditional payment rails, an INR stablecoin would power Web3, DeFi and on-chain ecosystems, enabling the rupee to circulate seamlessly on blockchain networks.
Such a move would also reduce reliance on dollar-denominated tokens like Tether (USDT), which currently dominate crypto liquidity. An INR stablecoin could boost rupee velocity, ease diaspora remittances and spur domestic fintech innovation.
Compliance need not be a hurdle. India’s tightening KYC-AML norms — including PAN, Aadhaar-linked verification, live selfies and geo-tagging — along with blockchain intelligence platforms such as TRM Labs, provide tools to monitor risk, flag sanctioned wallets and ensure legitimate cross-border usage.
What can an average crypto investor do to safeguard investments?
Singhal: Investors can stay safe in multiple ways. They should check whether the platform they use is authorised, registered, or compliant in the country where they reside. In India, this means preferring exchanges registered with FIU-India. They should see if the exchange adheres to KYC/AML norms and operates transparently within the tax and reporting frameworks.
Next, investors should separate custody and exposure risk. Avoid concentrating all holdings on a single platform, especially for long-term assets. Use exchanges primarily for execution and liquidity. Periodically reviewing storage and counterparty exposure. This is a basic risk-control practice followed by institutions.
It is also highly important for investors to be very sceptical of aggressive promotions. Regulatory actions globally often begin with unauthorised marketing. If huge returns are promised but compliance disclosures are thin, that is a red flag.
Subburaj: For most investors, losses don’t come from price moves alone, they come from platform risk, fraud, or poor security hygiene.
For Indian users, the first safeguard is choosing where you trade. Stick to well-known, FIU-IND-registered platforms which follow KYC, reporting, and compliance norms. This does not remove market risk, but it does reduce the chances of outright fraud or sudden platform shutdowns.
Verify everything. Double-check app links, URLs, and emails before logging in. And do not put all holdings in one asset or one place, diversification across assets and storage types limits damage if something goes wrong.
In short, most crypto losses are preventable. Basic caution, regulated platforms, and simple security habits go a long way in protecting your investments.
Shetty: Investors should always use regulated or registered exchanges and ensure jurisdictional compliance. Regulatory enforcement is part of market maturation so at the end of the investors, it shouldn’t be a hurdle, rather a way to inform themselves about evolving nuances in the ecosystem.
Compliance with local law enforcement agencies, rules and regulations set up by the government, are mandatory for crypto exchanges. In India, the FIU’s guidelines for VDA service providers require entities dealing in virtual digital assets to implement robust customer due diligence, transaction monitoring, record-keeping, and reporting mechanisms to ensure transparency, compliance, and financial system integrity.
Cryptocurrencies are still far from mainstream acceptance in India. Do you see this changing?
Singhal: Mainstream participation in India is evolving gradually. The most visible shift already underway is demographic and geographic, activity is increasingly coming from tier-2 and tier-3 cities, younger investors, and first-time participants in financial markets. Behaviour is also changing.
Many investors who initially entered for quick gains are now favouring established tokens and longer holding periods. Going ahead, adoption will depend less on hype and more on long-term. Clear policy signals and investor protection will be critical. As trust builds, crypto is likely to be treated as one component of a diversified portfolio rather than a speculative outlier.
Subburaj: Despite India ranking among the top countries by user numbers, global ownership still stands at just 4-5 per cent of the population — keeping participation a minority phenomenon.
Since 2022, mainstream finance has begun integrating crypto exposure through products such as spot Bitcoin ETFs, while institutions like Bank of America now include digital assets in portfolio conversations.
The true inflection point will come when users engage with crypto-backed systems seamlessly — without needing to consciously “opt in” to crypto at all.
Shetty: India topped crypto adoption last year since the young generation is digital ecosystem savvy with a high risk appetite, and wants to diversify their investment portfolio beyond the traditional PFs and Mutual Funds.
But it largely remains an investment asset rather than having a specific use case. This can only be solved by building more on chain products catered to the local audience, with ease of use, interfaces as simple as Web2 apps, and widespread knowledge sharing.
