Bitcoin saw a decline in its value on Monday. In afternoon trading on Monday, bitcoin dropped by 5.3%. Currently, it has a value of approximately $55,865. On Saturday, it hit the record high value of $61781.83. The cryptocurrency recorded this surge when the US government signed off on his $1.9 trillion fiscal stimuli and ordered an acceleration in vaccinations.
As per the cryptocurrency experts, this decline is due to the harsh stance of the Indian government on banning cryptocurrency. Indian Government is bringing a bill to ban all cryptocurrencies in India soon.
Why Bitcoin Value Dropped?
The recent rise of bitcoin happened mainly due to the economic recovery after covid related rules were softened worldwide. India, the third-largest economy in Asia, has changed the scenario for cryptocurrency. Under a bill proposed, if anyone is found dealing in cryptocurrency, it will be treated as illegal and the appropriate law will be applied to punish such investors.
The Indian Government brought this virtual cryptocurrency-related agenda in the January meeting. India is also building a framework to develop its own digital currency.
Answering a question related to the downfall of bitcoin, John Wu, President of AVA Labs said:
“Renewed interest from the Indian government in banning cryptocurrencies led to the initial drop from the $60,000 range down to $56,000.”
AVA labs help its client in creating a financial platform using blockchain technology. It is an open-source platform. Blockchain technology concept is used to develop cryptocurrencies.
Despite the Indian government’s warning related to cryptocurrencies, Indian investors are continuously investing in them. Transaction volumes are surging day by day from India. As per industry estimates, 8 million investors has done $1.4 billion investment in cryptocurrencies from India. No official records are present to justify such numbers.
On Saturday, Bitcoin saw a surge of 40% from February to hit $61782.83 value. Some experts are predicting bitcoin’s downfall soon. Investors are in a dilemma to buy it or not.
Future of Cryptocurrencies
While some investors have a strong belief that bitcoin will continue surging in the future as well. Seth Melamed, Tokyo based Cryptocurrency Exchange Liquid Chief Operating Officer said:
“Because it’s decentralized, government bans or acceptance is somewhat irrelevant.”
Bitcoin has observed exponential growth of more than 90% in a year. It is way ahead compared to traditional assets. Big business Giant Elon Musk has also invested in Bitcoin. Not only the investment, but Tesla is also considering cryptocurrencies to sell its electric vehicles. Bank of NY Mellon investment has also helped bitcoin in its growth.
Talking about the bitcoin surge, Sergey Nazarov, co-founder of Chainlink, said:
“The reason bitcoin’s continued rise is such a surprise to the traditional financial market is because they are looking at its fundamentals, while they should be looking at the market forces driving its adoption. Bitcoin is involved in the same market dynamic as all Fiat money, where market forces determine its value much more than any kind of clear fundamentals.”
Overall, financial experts are surprised by the sudden surge of cryptocurrencies. Is it a bubble? Or is it the future of financial transactions? We will know all answers in the future. But one thing is sure that cryptocurrencies are here to stay. How to tackle the volatile nature of it, that is a burning issue.