First Mover Asia: Trading on Indian Crypto Exchange Continues to Slump Following New Tax Laws; Cryptos Higher

Prices: Major cryptos took a turn upward but whether prices continue in the same direction is questionable.

Insights: Trading volumes on leading Indian crypto exchanges have plunged since the introduction of new taxes.

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After five days of wayward performances, bitcoin finally took a turn upward, but analysts questioned whether the latest rally would have any staying power amid a predictably disappointing start to quarterly earnings, monetary hawkishness and macroeconomic precariousness.

Bitcoin appears to be "falling out of the window, but latching onto the windowsill," Alex Kuptsikevich, an analyst at FxPro, wrote in an email to CoinDesk.

The largest cryptocurrency by market capitalization was recently trading just over $39,200, up over 2% over the last 24 hours.

Ether, the second-largest crypto by market cap, was changing hands at roughly $2,880, a more than 1.9% gain over the same period. Trading volume and volatility remained at low levels as investors continued to grapple with the toxic combination of rising prices and uncertainty.

Other major cryptos were mostly in the green, albeit not by much, although a big improvement over the previous day when a number of them plunged. On Wednesday, ATOM was among the brightest spots, rising more than 5% at one point. 

The increase came after Evmos, the EVM-Compatible Cosmos Chain, said that it was relaunching with new tools for users looking to claim airdropped tokens.

Crypto prices dovetailed with major equity markets, which broke a recent losing streak to post small gains. Gold, a traditional safe-haven investment fell over 1% amid the at-least temporary move to riskier assets.

Quarterly earnings among many big brands continued to disappoint. Facebook parent Meta (FB) fell short on its projections for revenue and earnings per share for its first quarter, and the social media giant posted a nearly $3 billion loss on its augmented/virtual reality unit. Meta shares have fallen over 40% since January.

Bad news continued to flow from Ukraine, where the Russian military bludgeoned major Ukraine cities and cut off gas exports to former Soviet Union satellites Poland and Bulgaria, threatening to widen the conflict.

"If you zoom out, there's some good, positive factors and tailwinds hitting the industry," Chris Perkins, president of CoinFund, told CoinDesk TV's "First Mover" program. "We're seeing that crypto markets have been resilient among some other payments in the tech sector. 

We're seeing strong trends from a policy perspective. We're seeing the left and right coming together and agreeing that we need to have really strong, principle-based policy."

Perkins added: "I talk to traditional investment managers all the time. When I left finance, they were all trying to get [into crypto], but now they're trying to get in even faster."

Indian crypto exchanges have seen trading volumes slump some 60% since new regulations around the rising sector kicked into force earlier this month, as per local reports and data from tracking tools.

WazirX and CoinDCX, two Mumbai-based exchanges, recorded volumes of just over $27 million in the past 24 hours. For WazirX, this is a steep haircut from average daily trading volumes of above $90 million before the new regulations took effect. Volumes on ZebPay, among the country’s oldest exchanges, hover around $12 million.

India, which has taken something of an anti-crypto stance, levied a 30% tax on profits from crypto transactions on April 1 and said it won’t allow offsetting gains with losses from other crypto transactions. Local crypto volumes dropped almost immediately afterward.

For several crypto investors, a 30% tax represents a steep cut into profits. In a country where the average monthly wage is just $437, every penny paid in taxes is a hefty blow to budding investors.

Indians have taken to social media to express their displeasure. The “#reducecryptotax” hashtag on Twitter has been trending in the country among crypto circles, with some stating hefty taxes can even lead to an exodus of talent.

“For lot of us, blockchain or #bitcoin is Plan B,” Sathvik Vishwanath, founder of local exchange Unocoin, tweeted on Wednesday. “The industry is giving opportunities in India like developed countries give. Govt should not curtail this through unfair taxes. #reducecryptotax.”

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