Coinbase Global (COIN +3.26%) just made a move that could open up new capital inflows for both Bitcoin (BTC 1.12%) and XRP (XRP 3.35%), among other cryptocurrencies large and small. Importantly, the same action could also end up routing a large and growing number of developers into the crypto sector, which would have major knock-on effects in terms of creating new opportunities for investors.
But will those benefits result in concrete gains in XRP and Bitcoin's price? It's very possible, so let's evaluate what just happened and estimate the odds of there being a meaningful amount of upside for an investor that commits $1,500 of capital into either coin (or both).
NASDAQ: COIN
Key Data Points
Investors in this key region will have an easier time buying coins now
On March 11, Coinbase said that the Financial Intelligence Unit (FIU) of India, an anti-money-laundering authority in the country, had granted it permission to start a registration process that is likely to end with it offering cryptocurrency investments and services there before the end of this year. The permission is a big deal because the company's past attempts to compete in India haven't gone well. In 2022, it halted its operations in the country, which has overall not been very friendly to the establishment of the cryptocurrency industry until quite recently. Now that change is in the air, Coinbase will be one of the exchanges responsible for onboarding India's huge population of investors and developers, and the impact could be sensational over time.
There is reason to believe both Bitcoin and XRP specifically will benefit from the influx of new financial and human capital.
CRYPTO: BTC
Key Data Points
The average annual inflation rate of the Indian rupee from 1957 to 2024 is just over 7%. Therefore, given that it isn't possible to create more Bitcoin thanks to the limits defined by its protocol, it is very likely that there will be people who are interested in keeping their savings in an alternative to their native fiat currency. That will be especially true if the inflation rate ticks above what people are already accustomed to in the coming years.
For XRP, the rationale is a bit different. Many people from India emmigrate and work in foreign countries. They then send money home to their families via international money transfers in what's called a remittance payment. In 2024, India was the single largest recipient of remittances by far, accounting for about 14% of all global remittances, totaling just over $129 billion.
But for many of those transfers, people paid incredibly high fees, as well as hefty currency exchange fees. They also likely needed to wait at least a few days for the transfer to go through, which is a major inconvenience. People would thus be highly motivated to use an alternative method if there was a way to cut those costs. If they used XRP to process their transfers, they wouldn't have to pay nearly as much, nor would they need to wait nearly as long.
So, the case for XRP gaining a tailwind here is likely even stronger than it is for Bitcoin.
CRYPTO: XRP
Key Data Points
Expect this to be a (very) slow burn
As bullish as Coinbase's entry into India is in the big picture, it will take a long time for the benefits to trickle through into higher prices of Bitcoin and XRP, if they ever noticeably do. Bitcoin is an asset with a market cap of $1.6 trillion, and XRP's market cap is more than $135 billion. It would take a huge amount of buying pressure to make either price budge significantly in the near term, even if longer-term upside is very likely.
Today, the market for cryptocurrency investing in India is estimated to be roughly $2.6 billion, according to research by the Imarc Group. That sum is forecast to grow at a pace of 18% per year for at least the next eight years, and surprises to the upside are fully possible. Nonetheless, a capital gains tax on crypto totaling 30% may be sufficient to dissuade many people from participating, assuming that tax remains intact through the government's ongoing set of reforms targeted at the crypto industry.
So, don't buy either of these two coins on the basis of this new development alone. The tailwinds they just picked up will likely be in play for many years to come, as faint as the boost may be in the next few years. In closing, just appreciate that there are still many good reasons to buy both of them independently of the growth of the market for crypto in India.
