Bitcoin fizzled in Monday trading as the famously volatile cryptocurrency pulled back after a spectacular new-year rally.
Prices fell as much as 17% in the biggest drop since March before recovering. The losses are small in the context of Bitcoin’s broader rally, with a 50% jump in December alone. After a parabolic 2020, the digital currency had started the new year with a bang, surging as high as $34,000 and hitting all-time highs on Sunday.
Bitcoin was down 7% to $31,227 as of 12:59 p.m. in London
“Today’s selloff is a reminder this is a relatively new asset, highly volatile, and still yet to find its place in the market,” said Adrian Lowcock, head of personal investing at Willis Owen Ltd. “There are many (major) hurdles for it to overcome for it to be a useful mainstream asset.”
As ever in the world of crypto, it’s hard to pinpoint the proximate cause for the latest bout of volatility. Bitcoin is up more than 300% over the past year, driven by a speculative fever from retail and institutional investors on the belief that cryptocurrencies are emerging as a mainstream asset class and can act as a store of value.
Reserve Bank of India’s proposed virtual currency has not been clubbed with the new crypto legislation. However, the central bank will regulate issues related to cryptocurrency.
All those found violating the exchange provisions will be penalised with a criminal imprisonment of upto one and a half years. Penalties in the range of Rs 5 crore to Rs 20 crore may also be levied by the regulator.