Cryptocurrencies have been experiencing a significant drop in value recently, with Bitcoin and other major digital tokens taking a hit. This is due to investors dumping mining equipment after China announced new regulations, which has been compared to the 1987 stock market crash. However, due to the faster movement of cryptocurrencies today, experts believe that the recovery could be quicker. Profit booking has also been cited as a major factor for the fall in prices.
The cryptocurrency market is likely to remain volatile for the next day or two, as China has stepped up its regulations on digital currency mining in order to save energy and reduce carbon emissions. Except for two dollar-denominated stablecoins, all of the top 10 cryptocurrencies were trading lower at 9.30 a.m. IST. Polkadot plunged 11 per cent, while Bitcoin and Ethereum each lost as much as 8 per cent.
Despite this, Bitcoin and Ether hit record highs in Asian trade on Tuesday, as enthusiasm for cryptocurrency adoption and inflation fears lent support to the asset class. Ethereum has risen 57 es since early October and Bitcoin investors have cheered the launch last month of a Bitcoin exchange-traded fund based on US futures and have sought exposure to an asset class that is sometimes seen as an inflation hedge. Bitcoin's price has remained relatively range-bound over the past few trading sessions, as any signs of profit-taking have been met with strong buying on the fall. A look at the Bitcoin options market could provide a clue on how to go about your own positioning in the cryptocurrency.
The last 24 hours were a period of consolidation for the cryptocurrency market, according to Edul Patel, co-founder and CEO of Mudrex. Bitcoin neared six-month highs ahead of the listing of the first U. S. futures-based Bitcoin exchange-traded fund (ETF), which investors hope will boost trading volumes in the cryptocurrency.
On Friday, Bitcoin fell to its lowest level in a month and was heading for its worst week in six months as traders have taken profits from a long rally and have been spooked by expectations that creditors of collapsed cryptocurrency exchange Mt Gox could settle their payments. Bitcoin rose more than 3 per cent, while Polkadot plunged more than 6 per cent. Among the top 10 coins, Ethereum was the biggest gainer, up nearly 10.30 per cent. Solana, XRP and Bitcoin were up between 4 and 7 per cent.
Others were also in the green, with Uniswap being one of the biggest gainers beyond the top 10 group, up 32 per cent. The charts below summarise clues about Bitcoin and Ether's prospects from technical and seasonal trends, as well as options positioning. Ethereum has started to witness good inflows following the recovery, which is a strong fundamental signal for the asset, showing that investors are still interested in accumulating it, according to ZebPay Trade Desk. The government is finalising legislation that will pave the way for the regulation of cryptoasset trading, while banning the use of virtual currencies for payments and transactions. Netero Dai, managing director for Asia at OKEx said that the impressive rally of Bitcoin and Ether has been a major factor in driving the overall growth of cryptoassets around the world.
Moreover, inflation is seen as a major enemy of investments and cryptoassets provide a strong hedge against it. The use of cryptocurrencies in India is unlikely to be banned, as is their recognition as legal tender according to a government source. A balance has to be struck between regulation and innovation when it comes to cryptocurrencies. Among the top 10 coins, XRP lost the most, falling nearly 3 per cent. Solana also fell more than 2 percent. Ethereum, Binance Coin and Dogecoin were down more than 1 percent each. Reports and rumours that the US SEC was poised to approve the launch of one or more Bitcoin ETFs have sent cryptocurrency prices soaring.
But what exactly did cryptocurrency ETFs eat? According to reports on Wednesday, Soros Fund management confirmed at a Bloomberg summit that they own some Bitcoin but not a lot. The exponential growth of Bitcoin has given millennials access to a digital asset far more profitable than gold. Bitcoin is guaranteed deflation at code level and cannot enter hyperinflation. Except for Tether which is pegged to the dollar, nine of the top 10 cryptocurrencies were trading lower at 9:30 am IST. Solana lost more than 6 per cent while Polkadot plunged 5 per cent. Binance US has the option to go public as Coinbase Inc., while all of the top 10 cryptocurrencies were trading higher at 900 hours (IST). Polkadot was up as much as 15 per cent while Solana followed closely with a gain of more than 14 per cent.