After Terra’s debacle, Celcius and Three Three Arrows Capital jittered. This was followed by Vauld suspending operations. Meta (formerly Facebook) is shutting down its crypto wallet Novi by September 1, 2022.Even the Indian crypto exchanges are facing massive liquidity pressure, with volumes slumping up to 80 per cent since January. The new taxation rules are adding more pain to their sufferings.
Amid the negative news flow in terms of operations in the existing gloomy environment, crypto exchanges, particularly the smaller ones, are on tenterhooks for survival.
After Terra’s debacle, Celcius and Three Three Arrows Capital jittered. This was followed by Vauld suspending operations. Meta (formerly Facebook) is shutting down its crypto wallet Novi by September 1, 2022.
Even the Indian crypto exchanges are facing massive liquidity pressure, with volumes slumping up to 80 per cent since January. The new taxation rules are adding more pain to their sufferings.
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In the wake of the crypto market crash, the prices of hardware used to support the mining of crypto assets are also falling dramatically. For example, a high-end graphic card is now almost 45% cheaper compared to its price a few months ago.
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Ashish Singhal, co-founder and CEO, CoinSwitch, said that the crypto industry has several business models. Some are inherently riskier than others, as recent events have shown. Right execution of business models can make or break a company.
He added that the platforms with constant innovation and evolution are likely to succeed more. “We are deliberate about everything we do, and our business model is simple, enabling us to buy or sell crypto at a very small fee.”
Market experts said that the crypto market was in the doldrums since the beginning of the year, and deteriorating macroeconomic factors added more selling pressure, putting several players on the back foot.
Edul Patel, co-Founder CEO of Mudrex, said that smaller exchanges have been facing the heat, leading to their closure. In such times, risk assessment and planning are very critical to sustain the market, he added.
Patel believes that contraction with few exchanges would be an outcome of the current series of events, which have passed the tests time and again. “However, diversity and competition are always healthy for any industry,” he added.
However, one should not rule out the possibility of new players entering the arena in the next bull run. With the steady and rising crypto adoption and increasing awareness, the doors are open for more entrants with innovative solutions.
Industry players do not rule out the merger and acquisition game in the coming months. The market shake-up will see stronger players snap up their weaker rivals in the coming months, they said.
The crypto industry is still nascent, and most participants are still centralised institutions, said Johnny Lyu, CEO, KuCoin. However, he added that all stakeholders must learn their lessons from the current market conditions.
“Exchanges with bleak strength to tide through tough times might not be able to survive,” he added. “We can expect a series of mergers and acquisitions in the crypto industry in the coming months.”
Interestingly, the fundamental essence of blockchain, being anti-monopolistic, was to eliminate the concentration of power in limited hands. If the numbers of players are limited in the spectrum, it would violate the same.
Raj A Kapoor, Founder of India Blockchain Alliance, said that the bigger players have deeper pockets and the smaller fishes may be sold at steep discounts. The grim reality of a non-regulated asset class stares at investors.
“The present scenario flips the paradigm as an undercurrent of centralisation where the power of control will be vested in a few large corporations and that essentially neutralises the concept of decentralisation in any case,” he added.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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