A joint report called “What does the future hold for crypto exchanges?” published by Boston Consulting Group (BCG), Bitget and Foresight Ventures in July this year showed that despite the recent downturn in the crypto market, the crypto economy is here to stay.
“The top 20 coins today look very different than just 5 years ago. Among them are Layer 1 tokens, which can validate and complete transactions without the need for another network. Overall, the crypto ecosystem has matured significantly, with around 10,000 applications today, compared to 800 in 2017,” the report said.
In addition, the report pointed out that institutional money has flowed into the asset class, leading to lower volatility and a maturing market profile. Citing Coinbase’s annual company filing, the BCG report noted that the institutional trading volume of the crypto exchange increased from 20 percent in Q1 of 2018 to 68 percent by the end of 2021.
Slow first half of 2022
The market has not witnessed any major upswing this year. The prices of Bitcoin and Ethereum have fallen by more than 50% from their all-time highs at the end of 2021. Despite some minor gains in recent weeks, the cryptocurrency market generally remained stagnant. In the first half of 2022, the crypto market saw several obstacles, including 30 percent taxation by the Indian government on VDAs (Virtual Digital Assets). Additionally, 1 percent TDS (Tax Deducted at Source) may have broken the backbone of crypto exchanges.
According to data provided to Outlook Money by crypto research and consulting firm CREBACO, trading volume on WazirX was down over 82 percent on July 3, compared to June 30, while the decline on CoinDCX and ZebPay was nearly 70 percent and 76 percent, respectively, in the same time frame, the situation has not changed much so far.
How stable will cryptos be in H2 2022?
On the point of the crypto market’s future in the second half of 2022, some experts believe that market volatility is likely to remain high in the second half, as it was in the first. “Soldering rally is also likely. Many tokens with inherent flaws or worthless tokenomics may not survive 2022. The industry will continue its march towards ever-increasing maturity,” says Ajeet Khurana, founder of Reflexical, a Web 3.0 company.
However, BCG has estimated that only 0.3 percent of individual wealth is currently held in crypto assets, as opposed to 25 percent held in stocks. Relatively shallow penetration indicates that there is room for growth. “Crypto adoption is growing among both retail and institutions. However, adoption remains low compared to traditional investment vehicles such as equities, payment technologies and institutional private equity allocation,” the report said.
Kumar Gaurav, founder and CEO of crypto bank Cashaa, said that most of the gains in the crypto market in 2021 were eroded by the bearish sentiments that started this spring. The stock market suffered a drop due to inflation, the ongoing war between Russia and Ukraine, new regulations and other factors. “It is difficult to predict what exactly will happen in the next few months of the year, but as of now we are seeing a slight increase in Bitcoin and other cryptocurrencies. The bull market could start anytime before the end of the year as Blockchain developers see after long-term crypto plans,” he said.
Crypto and blockchain enthusiast Jayjit Biswas believes that the crypto market will continue to struggle due to the US Federal Reserve’s aggressive monetary policy to calm inflation and recession fears. Investors must wait for signals from global trends before making informed decisions about their future investments in crypto. “In India, stock exchanges need to find a way out with the government to facilitate trading activities, but at the moment GOI is not ready to do that, but they are waiting for some instructions from the G20 or the US on the stance on crypto,” he said.
Interestingly, amid the negative sentiments in the crypto market, some experts gave a positive outlook for cryptocurrencies. “Looking at global cues, markets are expected to stabilize later this year. Projects and companies that have had stronger fundamentals and have focused on their technology in the bearish markets will launch new and innovative products that will drive positivity. In addition there are a lot of expectations with the upcoming upgrade of the Ethereum network,” said Anshul Dhir, co-founder and COO (Chief Operating Officer) of EasyFi, a decentralized finance blockchain company.
Sathvik Vishwanath, co-founder and CEO of Unocoin crypto exchange, said that given the sentiment towards crypto was not strong enough during the first half of the year, it has appeared to be the start of a stable market. “The current commitment of companies has not allowed the industry to enter the bear market. I expect the second half of this year to be more stable than bullish unless there is an unreasonable trigger to push it back into the bull market like last year,” he said.
