‘No intrinsic value’ – Then why does Bitcoin track RBI liquidity so closely?

Bitcoin is back in the spotlight – this time, in India!

Recent remarks from a senior Reserve Bank of India (RBI) official have started a conversation in the nation about what Bitcoin [BTC] really is… and what it isn’t.

While the comments caused backlash online, there’s more to this than you think.

The RBI’s not buying the crypto pitch

Speaking at a media event in Mumbai, RBI Deputy Governor T. Rabi Sankar made things clear. Stablecoins simply don’t pass his test of what money should be.

Source: X

He argued that, unlike sovereign currencies, stablecoins do not carry a clear promise to pay, a feature he said is central to any credible form of money. In his view, their benefits are overstated, while the risks (price instability and weaker control over monetary policy) are real.

“Beyond the facilitation of illicit payments and circumvention of capital measures, stablecoins raise significant concerns for monetary stability, fiscal policy, banking intermediation, and systemic resilience…”

Sankar also pushed back on the idea that cryptocurrencies hold inherent value. Referring to Bitcoin’s origins, he described it as a showcase of technology rather than a true currency, adding that its value is largely speculative.

The RBI continues to support the use of state-backed money, backed by global institutions like the IMF.

Crypto twitter pushes back

The community argued that Bitcoin and stablecoins pose little threat to the rupee. One user even called the central bank’s understanding of crypto outdated.

Source: X

One user pointed out that stablecoins are already being used by Indians for faster and cheaper remittances, often cutting fees by a wide margin compared to traditional routes.

Source: X

Others warned that delaying a framework for INR-backed stablecoins could backfire, allowing dollar-backed tokens to dominate instead.

They added that programmable, on-chain payments could complement systems like UPI. This is especially for cross-border use cases where India’s existing rails have limited reach.

A curious contradiction

Despite openly dismissing Bitcoin, the RBI’s balance sheet moves in close sync with Bitcoin’s biggest rallies and drawdowns. When RBI liquidity expands, Bitcoin tends to rise. When liquidity is tighter, Bitcoin weakens.

Source: Alphractal

That’s not to say RBI is driving Bitcoin, but the contrast is definitely uncomfortable.

If Bitcoin isn’t money, then why does it keep moving with the same liquidity forces that shape the global financial system? And why do the RBI’s moves correlate with BTC the most?

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Final Thoughts

• RBI may dismiss Bitcoin, but its liquidity cycles are aligned with BTC’s moves.
• The gap between policy rhetoric and market reality is widening.