Why did WazirX token (WRX) jump 30% after India announced its big crypto tax?

Finance Minister Nirmala Sitharaman said that the government will tax digital currency earnings at 30%. This tax is applied to an array of cryptocurrencies that fall under what the government deems as a taxable asset. Investors are excited about the potential benefits of investing in cryptocurrencies such as WRX in India, as it falls under what the government considers legally regulated trading platforms. 

For example, we see an association with one cryptocurrency exchange WazirX, which is based in India and associated with the WRX token. The WRX token works much like a utility token on this platform, providing users with fee discounts and opportunities to receive free cryptocurrency tokens in exchange for investing money into them.

Wazirx CEO statement

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WazirX CEO Nischal Shetty said the following after the recent budget was released: “It is heartening to see how our government is slowly becoming more open-minded when it comes to how various emerging asset classes can be leveraged for creating long term economic impact and prosperity. What is also interesting to notice is our Finance minister’s reference to virtual digital assets as ‘crypto’. The biggest development from today’s budget, however, was a clarification on crypto taxation in India – This has received much-needed recognition for India’s blockchain and crypto ecosystem and will help the country prevent any future ambiguity about the legality of crypto in India for the masses, we hope that this also helps Indian banks open up to providing services for blockchain businesses.”

As a result, WRX saw its price surge nearly 30% to over 1.00 USD in recent trading after the Indian government had announced a new tax regime for the regional crypto sector that was previously banned entirely, reversing its earlier strong stance of considering prohibiting the use of cryptocurrency altogether.

Analysts predicting a price surge

Utility tokens gain their value largely based on the promise that they could be used, in some form or another, as a means to access a particular product by investors speculating that their price will increase once the platform is launched. Javon Marks, a cryptocurrency and technology analyst, predicted further price increases within the WazirX utility token market and noted that it may climb towards $3.80 from its current $1 levels. At the core of his bullish analogy was technical analysis.

In detail, there was a breakdown in our downward slope resistance trendline. This statistical observation is shown as a positive indicator as it technically positions the WazirX token to rise by another 252% in the coming days, weeks, and months towards its April 2021 resistance targets.

“As long as the WazirX exchange holds this break, the target remains impossible to resist!” The analyst tweeted.

The statement came as the overall cryptocurrency market suffered in January. Cryptocurrency and blockchain investing can seem very overwhelming. Between all the constantly-shifting legislation, technology updates, and ever-evolving trends in the market, it’s hard to figure out which digital currency you should be choosing for your investment portfolio. In the month of January, it was revealed that some investors had lost tens of millions of dollars in a matter of days as various cryptocurrencies markets took drastic downturns. The WRX token itself dropped more than 30% into the month, mirroring similar moves across the top-ranking crypto assets.