While global markets marked one of their worst losses on Tuesday, cryptocurrencies were also seen moving in tandem, losing value by double-digit figures in single-day trade. On Tuesday, the price of bitcoin plunged below the $6,000 mark. While it’s difficult to gauge how much of the fall in bitcoin prices is linked to the stock market crash, experts point out that cryptocurrencies track the broader financial markets, especially when there’s a rally or crash.
On Tuesday, bitcoin plunged 20 per cent to a three-month low. Today’s collapse comes just six weeks after bitcoin hit a record high of $19,511, fuelled by a flood of speculators looking to make a quick buck, with warnings it could fall another 50 per cent.
In the recent past, cryptocurrencies have been pounded by news of crackdowns by governments including in China, Russia and South Korea, one of the biggest markets for virtual money. In India, while the government has time and again said bitcoin is not a legal tender, it has stopped short of banning it. Which means, technically, cryptocurrencies are not illegal.
Last week, government of India said it would “take all measures to eliminate” the use of cryptocurrencies as payment. Meanwhile, the Japanese authorities raided a virtual currency exchange after it lost $530 million to hackers.
The Reserve Bank of India has on many occasions expressed concern over the lack of regulatory oversight over cryptocurrencies such as bitcoins. Many global banking regulators have also flagged concerns about the same. Moreover, several commercial lenders have decided to stop allowing their customers to buy bitcoin through their credit cards owing to debt concerns.