financial market Many nerve-wracking events have been witnessed around the world. And the cryptocurrency market was no exception!
At the final Diwali festival a year ago, everything was shining in the cryptocurrency market. Prices continued to rise, with many cryptocurrencies hitting all-time highs. Unfortunately it’s not the same now. And that’s not necessarily a bad thing! The reason is simple. The prices are fixed and the ratings are fair. Let’s dig a little deeper to understand why this is true.
The global cryptocurrency market has lost billions of dollars, with total market value dropping from nearly $3 trillion to below $1 trillion in just one year. Meanwhile, the Indian government is also critical of the asset class and has launched tax reforms to neutralize demand.
Bitcoin It plummeted from a peak of around $68,000 (as of November 2021) to less than $20,000 in eight months. Ethereum also faced a downward spiral from $4,800 to around $1,000. Other popular cryptocurrencies among Indian audiences, such as Binance Coin and Solana, have also witnessed significant declines.
Key Factors Influencing the Crypto Market in Samvat 2078:
The conflict between Russia and Ukraine and China’s Covid-19 lockdown policy have disrupted the overall production of goods around the world. As a result, food prices and production costs have risen.
Rising inflation has forced the global economy to raise interest rates, adversely affecting global financial markets. As of May 2022, the US and UK are recording inflation rates of 8.6% and 9.1% respectively.
India’s inflation rate was 7.04% at the same time, still above the RBI’s target range of 2% to 6%. The RBI acknowledged economic uncertainty due to the inflationary environment driven by external factors. The overall risk factor is therefore forcing Indian investors to exit the cryptocurrency market given its volatility.
Indian regulatory environment
According to RBI, the cryptocurrency market is designed to circumvent regulation and act cautiously. Sticking to that philosophy, the Indian government has introduced a cryptocurrency tax law that imposes a 30% tax rate on income from cryptocurrencies and a 1% withholding tax (TDS) on cryptocurrencies.
New tax reform has reduced trading volume on Indian crypto exchanges. Additionally, Indian cryptocurrency companies are under regulatory scanners for financial fraud.
Crypto project failure
Recent events like the Terra Luna crash have forced governments to further tighten their stance on cryptocurrencies. lost the trust of
A triple-edged sword of inflation, tight regulation, and failed projects is slowing the movement of cryptocurrencies in India.
best and worst performers
Let’s start with the best performing crypto project in the last few months.
MKR is the Ethereum-based governance token of MakerDAO and the Maker Protocol. It is one of the earliest protocols within the DeFi ecosystem.
This project manages DAI, a decentralized crypto with a stable value soft-pegged to the US dollar. Over the last 30 days, the price has increased by 74.88%, reaching US$1,049.
Huobi Token (HT)
HT is the native token of Huobi Global, a crypto exchange built on the Ethereum network. HT faced a 68.58% rise to reach 7.69 USD.
Quant was launched to connect blockchains and networks globally without hindering network efficiency and interoperability. QNT is currently at 169.67 USD, an increase of 68.10%, approaching Huobi Token.
Here are the top 3 worst performers in the last few months.
Klaytn launched in June 2019 as an open source blockchain focused on the metaverse, games and creator economy. KLAY dropped 33% to reach 0.133 USD.
Chillz is a well-known crypto project in the sports and entertainment sector. This allows users to participate in the governance of their favorite sports brands. CHZ dropped 30.57% to reach 0.1675 USD.
Ethereum Classic (ETC)
Ethereum Classic (ETC), a hard fork of Ethereum, aims to host and support decentralized applications (DApps). ETC is currently at 21.63 USD, 26.29% cheaper than last month’s price.
In a best-case scenario, regulators around the world might work together on a global framework for cryptocurrency regulation.
However, at least in the short term, the odds of that happening are slim as international views contradict each other. At one end of the spectrum are El Salvador and the Central African Republic, which have stated that “Bitcoin is their official currency.” In contrast, China mentions that “crypto trading is illegal.”
India is unlikely to be on either end of the spectrum given plans for CBDC (digital rupee or e-rupee). It can effectively reduce the time taken for international remittances, which is believed to be advantageous for the global remittance economy.
However, India’s current cryptocurrency tax rules continue to negatively impact overall trading activity, forcing entrepreneurs to move to lucrative jurisdictions like Dubai.
The chances of a more friendly reform in India could be even lower if:
– Increased use of Bitcoin and other well-known currencies cipher for illegal activity
– Increase in security breaches and other similar threats to blockchain-based payment systems
These problems may seem hypothetical, but they can occur at any time. It is unlikely that India or the government will completely stop cryptocurrency adoption in the future, but it could slow down.
Therefore, the Indian entrepreneur and cryptocurrency community should work with regulators to fine-tune policies and create a favorable environment.
(Author is Edul Patel, CEO and co-founder of Mudrex)