BENGALURU: The fears of volatility surrounding the most popular virtual currencies including bitcoin, ethereum and dogecoin turned stronger as the tokens plunged by 30-50% on Wednesday. But when Bitcoin touched its lowest level since March 2020 (the onset of the pandemic) at $30,000, Tesla CEO Elon Musk in his standard emoji style tweeted that he is not selling off his bitcoin holdings. This saw the digital token stabilise at around $42000 on Thursday.
A second cryptic tweet by Musk on Dogecoin threw another lifeline triggering a token jump of the cryptocurrency by 11%, helping it touch 42 cents. Ethereum was also up 12.84% at $2,887.8 on global exchange coindesk.
Data from coinmarketcap.com indicated that the cryptocurrency market lost $1 trillion in market capitalization on Wednesday as globally economists weighed in on the market rout caused by the sliding virtual currencies.
It was also a day when India's largest crypto exchange, WazirX, crashed as people bought the coins during dips and there were huge outflows. The homegrown platform has nearly 2 million active users.
Nischal Shetty, CEO, WazirX told The New Indian Express that the bitcoin price correction had been imminent.
"It's a healthy correction for the market. We have to understand, markets don't go straight up, it has to take a breather to correct itself and then move up again.
"The global pandemic has been the biggest driver as it has led to people trying to find new ways to earn online. This is where they come across crypto, and of course, Bitcoin. It's a global asset, and anyone can invest in it while sitting in any part of the world. This has given a major boost to global crypto adoption. Moreover, we also saw a lot of institutional investors like PayPal, Tesla enter into crypto. News like this has also boosted retail participation," Shetty said.
The wild ride of the cryptocurrencies on exchanges began when China's central bank sounded a warning against the use of virtual currencies including trading on exchanges as well as transactions by the country's financial institutions.
In India, even as the RBI has recommended a complete ban on digital currencies and floating an indigenous digital asset, sources said that the finance ministry is in talks with industry stakeholders for regulating the market. The banks have however severed ties with top crypto exchanges in India after citing an informal guidance from the RBI.
According to the Internet and Mobile Association of India, the crypto community consists of over 10 million crypto holders holding over $1 billion worth crypto assets, 300+ startups generating tens of thousands of jobs and hundreds of millions of dollars in revenue and taxes.
There's a daily trading volume of $350 million-$500 million.