Indian crypto traders are increasing their exposure to Bitcoin even as prices fell 32% in the first half of 2026. While domestic exchanges see higher spot trading volumes for the asset, regulatory challenges like the 1% tax on transactions continue to drive users toward offshore platforms.
Bitcoin is emerging as a preferred digital asset for Indian investors in 2026, even as the broader market faces price volatility. Data from CoinSwitch indicates that Bitcoin's share of total spot-trading volume on its platform rose to 16.7% in the first half of the year, more than doubling from 7.6% during the same period in 2025. This increase in trading activity occurred despite a difficult environment that saw the price of the asset fall by 32% during the first six months of 2026.
The price of Bitcoin dropped to approximately $59,500 by June 2026, a sharp decline from its October 2025 peak of roughly $126,080. Market observers link this price dip to global selling pressure and outflows from Bitcoin-related exchange-traded funds. Despite this downward trend, individual investors in India appear to be prioritizing Bitcoin over other digital assets, signaling a shift toward the largest cryptocurrency in their portfolios.
Regulatory friction remains a significant factor influencing the market. The 1% Tax Deducted at Source (TDS) on crypto transactions is a primary point of concern for domestic exchanges. This tax rule has widened the competitive gap between Indian and international exchanges, as many frequent traders move their activity to offshore platforms to avoid the tax impact. Industry data from recent years shows that billions of dollars in trade volume have shifted to these offshore venues, which complicates efforts by domestic platforms to maintain liquidity and market share.
Derivative trading is also a key area of activity. For instance, data from WazirX shows that the Bitcoin-to-Rupee (BTC/INR) futures contract has remained one of the most-traded instruments on its platform through the middle of 2026. This indicates that traders are using these instruments to hedge or take positions, even as the regulatory environment forces a divergence between onshore and offshore trading volume.
The demographic reach of the crypto market in India is also expanding. Currently, over 82% of users on major exchanges are based in non-metro cities, showing that interest in digital assets is not limited to financial hubs. Western and Central India remain the primary regions for activity, driven by a combination of high-net-worth individuals and a growing base of users accustomed to digital payments.
Investors will need to monitor how domestic exchanges navigate the competitive pressure from global platforms and whether any changes occur in the regulatory environment regarding transaction taxes. The future growth and health of the domestic crypto market will likely depend on the balance between offering competitive liquidity and complying with existing tax and regulatory requirements.