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Don't blame India for bitcoin tanking

“It’s business as usual.”

by David Gilbert
Feb 2 2018, 11:34am

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The ongoing cryptocurrency selloff of 2018 slammed investors Friday, with all digital coins suffering significant losses. Bitcoin fell to its lowest price in more than two months, dropping 14 percent in 24 hours to a low of $8,100 — and the pullback shows little sign of stopping.

Almost $200 billion has been wiped off the bitcoin market cap in six weeks since the coin peaked at $20,000 in mid-December.

Bitcoin’s fall has had a knock-on impact on the entire cryptocurrency market. None of the 100 most valuable cryptocurrencies tracked by CoinMarketCap.com has risen in value in the last 24 hours, with the vast majority suffering significant double-digit drops.

More than $100 billion was wiped from the entire cryptocurrency market in the last 24 hours, and more than $400 billion in the last six weeks.

Some analysts have pegged the latest selloff to Thursday’s budget speech by Indian Finance Minister Arun Jaitley, which Reuters described as a “no-holds-barred attack on virtual currencies such as Bitcoin.”

Reporting on the speech, Quartz said Jaitley had “just killed India’s cryptocurrency party.”

The truth is somewhat different. Here is what Jaitley said about cryptocurrencies during his address:

“The government does not recognize cryptocurrency as legal tender or coin and will take all measures to eliminate the use of these cryptoassets in financing illegitimate activities or as part of the payments system.”

While his statement is somewhat ambiguous, many Indian experts say it doesn’t change how bitcoin and other digital coins currently work on the subcontinent.

“It’s business as usual” said Unocoin, which describes itself as India’s leading bitcoin company.

Jaitley also reiterated the country’s desire to adopt the blockchain technology that underpins cryptocurrencies “for ushering in the digital economy.”

The latest selloff has also been pegged to the ongoing controversy surrounding digital coin Tether and the investigation launched this week by the U.S. Commodity Futures Trading Commission.

Facebook’s decision to ban all ads for cryptocurrency products — including bitcoin and ICOs — has also “spooked” some investors.

In reality, the latest pullback is likely just a correction to the market that was always going to happen following the exponential gains bitcoin saw in 2017.

“The main cause for the pullback in first weeks of 2018 is the massive surge in the last few weeks of 2017,” Mati Greenspan, an analyst with eToro told VICE News. “We're coming up on the $8,000 support level now. Let's see how she holds up. A modest break below should be a good sign. A strong and sustained break below $8,000 could lead to further selling.”

Cover image: A symbol photo of ripple and bitcoin cryptocurrencies. (Ulrich Baumgarten via Getty Images)