Recently we celebrated Dussehra. It represents the end of the joyful Navratri and the triumph of good over evil. The crypto industry incidentally experienced a rollercoaster ride this year. The most widely used cryptocurrency at the start of 2022 had a price that fluctuated around $47,000. It reached $19,000 in October 2022. At the beginning of the year, the overall market capitalization was over $2 trillion; it is currently less than $1 trillion.
A Look at the Crypto Industry During Dussehra
The ten heads of Ravana symbolized his control over the six shastras and four Vedas in ancient mythology. However, some academics today contend that these also signify his shortcomings, some of which contributed to the Ramayana War and the eventual destruction of his kingdom, kingship, and kindred. According to Hindu mythology, the meaning of the name Dussehra is derived from two words: “Duss” refers to Ravana’s ten heads, and “Hara” signifies to be victorious.
In honor of Dussehra, let’s review the ten events that crushed the cryptocurrency industry–
1. Taxation on VDAs
As a result of Nirmala Sitharaman, the Union Minister of Finance, making the relevant announcement in the budget in February of this year, gains resulting from cryptocurrency trades became taxable as of April 1, 2022.
The implementation of taxes has also affected the declining quantities of cryptocurrency in India, where the market has been in a downward spiral since the beginning of this year. Investors have, however, benefited from it in other ways as well. Major crypto exchanges saw a significant drop in trading volumes when crypto taxation went into force.
2. ED Crackdowns
In accordance with the 2002 Prevention of Money Laundering Act, the ED froze the cryptocurrency Tether, an Ethereum token pegged to the US dollar, totaling Rs. 47.64 lakh, in October 2022. The ED stated that this came after an inquiry into E-nuggets, a mobile gaming app, and a person named Aamir Khan and others. Therefore, ED continues enforcing anti-fraud and anti-poor management laws against cryptocurrency exchanges.
3. Russia-Ukraine War
The Russia-Ukraine War has significantly impacted the global cryptocurrency market. On February 24, 2022, as Russia began a full-scale attack on Ukraine, the cryptocurrency market cap fell to as low as $1.57 trillion, losing about 9.66% in the previous 24 hours.
Crypto prices are significantly impacted negatively by the Ukraine war. When there was tremendous worldwide instability, investors felt far more at ease choosing the safest, most established, and reliably profitable asset classes.
The cryptocurrency market attitudes mostly stayed the same despite Ukraine’s numerous efforts, including introducing a new website to enable the buying and selling of non-fungible tokens (NFTs) to raise money for its ongoing war operations.
4. Terra Luna Crise
The cryptocurrency industry lost more than $200 billion due to Terra Stablecoin’s collapse Coins from Terra Luna lost value as their price fell by 80%. The fact that stablecoins follow supply and demand economics. To maintain price stability, every stable currency needs to be backed by collateral.
5. Interest Rates on us Federal Debt
In September 2022, the Federal Reserve made another significant rate rise announcement, which caused the price of Bitcoin to drop to $19,000. Ethereum, too had a steep decrease, although it managed to hold firm at over $1,300 for the time being.
6. Payment Challenges
The National Payments Corporation of India (NPCI) issued a circular on April 7, 2022, stating that they are unaware of any crypto payments occurring through the Unified Payments Interface (UPI). Due to this, UPI platform providers withdrew their services from all cryptocurrency exchanges, preventing cryptocurrency investors from using UPI payments for cryptocurrency investments in the future. Following this, several cryptocurrency exchanges stopped access to their payment processors, making it impossible for users to make bank-based investments there.
7. Cryptocurrency Hacks
A staggering $1.9 billion worth of Bitcoin was stolen in hacks of various services in the first seven months of this year, according to research released in August 2022 by Blockchain analysis company Chainalysis, a 60% increase from the same period in the previous year.
8. Ceos Abandon the Crypto Market
Several crypto founders and co-founders switched their attention and energy from crypto to other Web 3.0-related ventures during the crypto winter.
These resignations have, in some way, behaved like demons for the cryptocurrency industry’s confidence.
9. Bankrupt Three Arrows Capital
According to court documents, Three Arrows Capital (3AC) owes a staggering $3.5 billion to 27 companies, including lender Genesis Global Trading, Blockchain.com, and Voyager Digital.
The filings state that 3AC failed to repay loans and frequently disregarded margin calls from lenders, which allowed its investment accounts to fall below the threshold they needed to be topped off.
10. Cryptos’ Volatile Nature
According to data made public by Citibank on October 3, 2022, the value of cryptocurrencies has fallen sharply from its peak, and growing skepticism of stablecoins as a result of the devaluation of the US dollar has led to withdrawals from Tether, the largest stablecoin.
Though their passionate and loud fan communities have long crypto industry for cryptocurrencies like Bitcoin and Ethereum as powerful alternatives to the stock market, the reality is now a little more complicated. Over the past several months, there has been an increasing correlation between the two types of investments, and losses in the stock market increasingly routinely herald equal or even bigger drops in the price of cryptocurrencies.