Just a week after the Supreme Court (SC) threw a lifeline to Indian cryptocurrency start-ups by setting aside the RBI’s order effectively banning digital currencies, the world’s most traded virtual currency — Bitcoin — tanked over 30 per cent during just a week as investors get spooked by the Coronavirus outbreak.
The past week has seen Bitcoin steadily losing its value in a viciously volatile market. While one Bitcoin had been valued at over $9,070 on March 5 but is currently trading at little over $5,200 as of Friday, March 13. The intervening period has seen sharp dips and rebounds even as the general trend has been steadily lower.
In fact, on Friday alone, Bitcoin has swung wildly, dipping below $3,700 before rebounding sharply to over $5,000. In overall terms, the leading world cryptocurrency has tanked over 30 per cent since the beginning of this year with as much as $40 billion in investor wealth wiped out.
According to sources at Indian cryptocurrency exchanges, which heaved a sigh of relief last week after the SC revoked the RBI ban, the current volatility in Bitcoin and other cryptocurrencies could see Indian investors stay away.
“Bitcoin was always pretty volatile and the current swings may convince investors to park their cash in other asset classes,” noted an exchange executive who wished to be unnamed, but added that until the virtual currency sector matured, such swings were not unexpected.
Some experts like Peter Brandt have speculated that the digital currency may fall as low as $1,000 in value, or even lower, before the Coronavirus pandemic burns out, which could see over 90 per cent of investor wealth currently invested in the currency destroyed.
ssssssssssssThe SC had on March 4 held that the RBI was not able to provide evidence to prove that cryptocurrencies could potentially harm regulated entities like banks and NBFCs. According to the SC, the RBI’s circular imposing a wholesale moratorium on the provision of banking services to cryptocurrency players had “unreasonably impinged” on what is otherwise a valid vocation.
$40 billion investor wealth wiped out
The leading world cryptocurrency has tanked over 30 per cent since the beginning of this year with as much as $40 billion in investor wealth wiped out. According to sources, the current volatility in Bitcoin and other cryptocurrencies could see Indian investors stay away.