Within two weeks of rolling out one percent TDS on crypto transactions, the trading volumes have witnessed a steep fall. Sample this. The volumes of WazirX on June 30 were around $10 million, which declined to a little over $4 million on July 14.
Likewise, the volumes declined from $2.8 million on June 30 to $1.4 million for Zebpay and for Bitbns, the volumes dropped from $9 million to $2.24 million during the same period.
Not only crypto prices, the prices of non-fungible tokens (NFTs) have met with the same fate since the majority of NFTs are valued in the Ethereum.
Recently, Reuters reported that monthly sales volume on the largest NFT marketplace, OpenSea, dropped to $700 million in the month of June, down from $2.6 billion in May and quite low from January's peak of nearly $5 billion.
“All the crypto prices globally have seen a major price correction, due to that even NFT prices have dropped since the majority of the NFTs in the market are priced in Ethereum which is crypto. Hence if the Ethereum prices rise back, the US dollar value of that NFT will also come back. Where we’re going wrong is we’re valuing the NFTs which are meant to be sold in ether; against U.S. dollars. One Ethereum is still one Ethereum, it's the US dollar value of an Ether that goes up and down depending on the market situation,” said Sidharth Sogani, founder and CEO of CREBACO.
Trading volumes of crypto exchanges
Another reason that Sogani points out for significant fall in the NFT prices is the speculation by market participants.
“There have been over 95 percent of projects in the NFT space that are pure speculation and do not have any community or underlying value, due to this I believe that these projects will never come back to their original prices and are victims of what we call as a shakeout,” he said.
Gaurav Mehta, Founder of Catax — a crypto tax platform — underlines that the price of cryptocurrencies were inflated by ecosystem players’ trades and also by a range of speculative activities.
“Transactions involving cryptocurrencies and NFTs are conducted primarily using unregulated cryptocurrencies in an unregulated market with no oversight, making them subject to manipulation and greed. With the recent market meltdown involving trading volume and prices of leading NFTs, it is reasonable to conclude that the price of cryptocurrencies was inflated not only by ecosystem players' trades, but also by speculative activities that did not reflect market price,” says Mehta.
However, some industry experts view the ongoing fall in crypto prices and volumes as routine and look forward to a brighter future.
“Despite the severe downside, the strong players and projects with real value have survived. This has also weeded out a lot of fakes and scams. The recovery in the crypto market has resulted in the market cap touching $1 trillion once again. We may see investor interest once there is clarity around global economic growth and liquidity situation,” said Dillon Bhatt, Head of International Business Development, Millwood Kane International.
Prices stay low
Cryptocurrencies on Tuesday traded flat in global markets. Bitcoin was down by 1.5 percent to $21,895, ethereum was higher by 3.4 percent to trade at $1,528, binance coin was down by 0.09 percent, ripple was lower by 1.5 percent and solana rose by 6.2 percent to $44.71, according to the Coindesk data at 15.30 (IST).
In the western world, crypto sector is reeling under a lot of pressure because of historically low prices, exceptionally high inflation and overall grim market sentiment.
A month after pausing all transfers and withdrawals, Celsius Network — cryptocurrency lending company based in New Jersey — announced its bankruptcy last week.