The trading volume in major crypto exchanges has nose-dived to the bottom. Wazirx, CoinDCX, and Zebpay have seen more than 90% fall in their volumes. This fall was expected when the Indian government announced heavy taxes on crypto earnings. However, now we know how much the volume has dried up.
CryptoIndia, a verified account on Twitter, posted details about the magnitude of the reduction. According to their data, Wazirx has lost 98 % of its volume, from $ 195 million to $ 4.5 million. CoinDCX, another exchange, saw a similar loss in volume. It came down to $ 2.1 million from $ 32 million, which is a 93 % reduction. Zebpay, another Indian exchange, lost 94 % volume. It used to be $ 19 million earlier. But, now it gets only $ 1.1 million in volume. By any measure, these are huge drops.
However, one exchange, Bitbns, did not see as much drop. It saw only a 17 % drop in volumes, from $ 24 million to $ 19.8 million.
“Ever since new crypto tax rules became applicable, trade volume on Indian exchanges continues to tumble Wazirx – $195M$4.5M – 98% Coindcx – $32M$2.1M – 93% Zebpay – $19M$1.1M – 94% Bitbns – $24M$19.8M – 17% (Somehow not affected that much)”
Multiple factors affecting Indian crypto enthusiasts
The reason for this fall is not difficult to guess. Indian crypto users have been doubly impacted. On one side, the government is showing its dislike for cryptos by levying TDS on crypto deposits and charging high-income tax on digital asset gains. On the other hand, the whole global crypto winter has caused crypto users to lose interest in the crypto markets.
What is the solution, then?
CryptoIndia suggested a few solutions which can be adopted to bring back volumes to exchanges. They suggest enabling futures trading for cryptos since the 1% TDS rule is not applicable for Futures trading. However, this is a risky option since futures and options allow the use of high leverage, which could lead to heavy losses for inexperienced traders.
Another solution for the exchanges is to provide investors of cryptos with an option to do SIP. The SIP option is available in major scripts like BTC and ETH but not for many other altcoins. All major cryptos are a heavy discount, and long-term HODlers could decide to take the SIP route to make investments and drive the volume back up.
Exchanges should encourage crypto lending and borrow to the long-term HODlers. This would encourage the HODLers to lend their holdings to exchanges in return for interest.
Exchanges could also try for a license to provide trading in the conventional stock and commodities markets. This would encourage other financial users to come to these exchanges and increase revenue and growth.
What are crypto exchanges saying?
Rajagopal Menon, the VP of WazirX, said:
“There has been a fall in trading across the industry as investors shift to hold, and there may be another dip as traders see their capital getting locked while trading on KYC-compliant Indian exchanges.”
Despite market-wide adverse conditions, Edul Patel, CEO of Mudrex, is nevertheless upbeat.
“There is no discussion of staff reductions because we are aggressively hiring. Bear markets remove the clutter to make room for imagination and innovation. It is a “build” market for us rather than a “bear” one.