The crypto market entered a bear phase at the beginning of March 2022 and investors started to consolidate their portfolios to minimize the risk.
By Shivam Thakral
The ruling by the honorable Supreme Court of India in March 2020 acted as a renaissance for the crypto industry in India. The crypto exchanges which were inactive or mostly operating in a grey area actively started offering trading services to the Indian users with a vision to make crypto a mainstream investment avenue in one of the largest democracies in the world. After the Supreme Court lifted the ban on crypto trading, Indian investors who were still sitting on the fence, took the plunge into the world of crypto assets. As a result of which, a large number of Indian investors were willing to try the new asset class called crypto, the trading volumes started picking up in 2020 and went through the roof in 2021.
In 2021, Bitcoin created a new all-time high of $69,000, and the overall crypto market crossed the $3 trillion mark for the first time. These numbers indicated that Indian investors were welcoming crypto assets with open arms, making it an investment choice to beat high inflation. At the beginning of 2022, it was estimated that 20 million Indians have invested in crypto and India’s total crypto holding stood at $5.3 billion.
After the new crypto tax regime came into effect, the investors who were in the top tax bracket were already paying 30% tax on their income, so that was taken by the industry positively. The most complicated was the TDS on crypto trading which confused everyone. The 1% TDS rule was proposed without giving any clarity on the process and reporting of the same which left the crypto exchanges and investors confused.
The crypto market entered a bear phase at the beginning of March 2022 and investors started to consolidate their portfolios to minimize the risk. The world’s oldest cryptocurrency, Bitcoin, crashed to its lowest level since July 2021 and the overall bitcoin market cap fell below the $1.5 trillion mark. The UST loses its dollar peg and LUNA crashing to zero inflicted fresh wounds on the already battered crypto market.
But, every crisis is an opportunity in disguise and the current corrective phase offers a great opportunity to the crypto companies to reconcile and recalibrate for the future. The financial markets are subject to such bearish cycles and seasoned investors/projects are poised to create long term strategies to neutralize the impact of the current price dip.
Here are the top 5 things crypto companies should focus on during the corrective phase:
Build and diversify
The crypto industry is one of the most dynamic in the world and every day, there is a new development that crypto companies have to chase. Crypto entrepreneurs have a great opportunity to create a robust blockchain infrastructure that will act as a foundation for offering new services in the field of the metaverse, blockchain payment systems, crypto wallet services, blockchain banking, and blockchain data management services among many others. The diversification will not only create new revenue streams but also boost the adoption of blockchain as an everyday technology.
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The expansion of business is not possible without a motivated and talented workforce. The current phase leaves ample room for training and development of the resources within the organization and scouting for the right talent to facilitate the growth of the organization. The training and development programs should be focused on equipping the workforce with the latest technology to scale up when required and also create technology for future businesses at a low cost.
Spread awareness and bust myths
The crypto adoption in India is still limited to metro cities with some spillover to the tier 2 towns. The crypto community in India will grow with growing awareness of crypto-related products and services. The time is ripe for running below-the-line awareness campaigns to educate the end-users about the risks and benefits of crypto. The higher level of awareness will results in deeper penetration of crypto services in the financial ecosystem of India.
The crypto assets are truly global and so should be the business of crypto. The crypto companies in India should enter global collaborations and even launch solo operations around the globe to stay profitable. The crypto regulations are still taking shape and some countries are moving more swiftly towards regulating crypto and offering a great business opportunity for crypto companies in India.
Optimize cash flow and business model
Saving cash for better times will be the wisest thing to do for crypto companies in India. It will be prudent to keep a cash war chest ready and use it at the right time to boost the business and capture new markets. The cash burn can also be reduced by cutting down on high-cost marketing activities and focusing on organic ways of engaging your target customers.
(The author is CEO of BuyUcoin, a crypto exchange . Views expressed above are those of the author and not necessarily of financialexpress.com)