The markets may have been spooked by the news that India is reportedly set to propose a new law banning cryptocurrencies.
It’s been a dramatic weekend for Bitcoin.
Saturday saw the world’s biggest cryptocurrency crack a stubborn resistance level and race to new all-time highs of $61,683.
That’s a 5.7% improvement on the previous record of $58,330 that was set in February.
Unfortunately, the surge to uncharted territory didn’t last. Bitcoin fell sharply in the early hours of Monday morning — and at one point, slid 8% in six hours to lows of $55,546.
What Caused the Drop?
The markets may have been spooked by the news that India is reportedly set to propose a new law banning cryptocurrencies, that would carry fines for anyone caught trading or holding BTC.
This would amount to one of the world’s strictest policies against digital assets — and dashes hopes that India might not pursue such a draconian approach. (That said, the government had previously planned to impose a jail term of up to 10 years for anyone found flouting the rules.)
Transaction volumes in India have been swelling in recent months. According to Reuters, eight million investors now hold $1.4 billion in crypto between them. Under the new measures, they will have six months to exit their positions.
Other analysts say that they haven’t been too concerned by Monday’s pullback. Although it may seem large in dollar terms, it’s rather tame as a percentage.
All eyes now are on institutional demand, as big buy-ins from corporations can help prop up Bitcoin’s price. Crypto analyst Lark Davis wrote on Twitter:
“Whale addresses holding 1,000 or more Bitcoin have been selling, this does not mean the bull run is over, it just means that profit taking is happening.”
It’ll be also interesting to see whether stimulus checks — which will be landing on doormats across the U.S. in the coming days — will have an impact on retail demand for Bitcoin.
Eligible Americans are going to be entitled to a payment of up to $1,400, depending on their household income. When a previous stimulus check of $1,200 was issued in the early days of the coronavirus pandemic last April, some exchanges reported an unusual surge in deposits… for $1,200.
It seems that making that investment back then would have paid dividends. According to @BitcoinStimulus, which tracks what that sum would have been worth if it was used to buy BTC, it would have turned to $10,991 as of Saturday.
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