Amid this crypto winter, the global crypto holders have suffered a lot. The cap for the global cryptocurrency market fell below $1 trillion. This is way below the peak of November 2021, when it surpassed $3 trillion. According to the information provided by the crypto research and consultancy firm Crebaco, 82% of WazirX's volume was down. The displayed fall in crypto exchange volume was 70% and 76% on CoinDCX and Zebpay, respectively.
While several global challenges have contributed to the fall of the market this year, some local reasons have also led to the larger fall of trading activity on Indian crypto exchanges. For instance, there has been a drop of as much as 63% in the trading volume of Indian cryptocurrency since the 1st of July, when the tax deducted at source (TDS) of 1% has been imposed.
The market was alarmed when the Ministry of Finance first established the taxes for cryptocurrencies in India. After the recent November 2021 bull market, the government decided to impose a heavy tax on digital assets.
Crypto India recently put up a Twitter thread that drew attention to pressures on Indian crypto exchanges. As estimated, the numbers have deteriorated, giving in to the same concerns regarding the regulations on cryptocurrencies in India.
During weekends, the trading volumes are comparatively lower, according to crypto exchanges. Thus, it is still too early to estimate the exact impact that TDS has had. However, analysts from other industries are anticipating that there is a possibility of continued pressure on the trade.
According to some senior crypto analysts, the recent implementation of 1% TDS on the sale and transfer of virtual digital assets would force the day traders to give up the Indian exchanges and rethink their ideas.
The volumes on cryptocurrency exchanges witnessed an evident hike last year due to the persistent investor interest. As per the industry estimation, the top five or six crypto platforms together had a trading volume of $70-100 billion in 2021. During the period, WazirX alone handled approximately $43 billion.
Due to several global macroeconomic challenges, the industry experts predict that the bear market will result in a further downfall in trade activity. While the financial resources of some exchanges will help them survive the current market, others are thinking about branching into alternative industries or delving into foreign markets.
Crebaco states that those industries which have been severely affected by the new tax regulation, are the ones that have already witnessed the fall of volumes by 40 to 80% in June 2022.