After hitting a record high of $61,781.83 on Saturday, 13 March, Bitcoin dropped again on Monday, as investors digested a potential ban from India on cryptocurrencies.
The cryptocurrency had peaked following US President Joe Biden’s signing of his $1.9 trillion fiscal stimulus and an acceleration in vaccinations.
According to analysts, Bitcoin’s rise has been helped by the prospects of a steep economic recovery as some investors tend to see it as a safeguard against inflation.
In afternoon trading, Bitcoin was down 5.3 percent at $55,865.
Talking to Reuters, a senior government official informed that Asia's third-largest economy is preparing a bill that would criminalise possession, mining, trading, issuance and transferring of crypto-assets.
This comes following the government’s January agenda that called for a ban on private virtual currencies while constructing the framework for India’s own official digital currency.
President of AVA Labs, which is an open-source platform for creating financial applications using blockchain technology, John Wu said, "Renewed interest from the Indian government in banning cryptocurrencies led to the initial drop from the $60,000 range down to $56,000," Reuters reported.
Despite lack of official data, industry estimates show that volumes of transaction are increasing even with threats of criminalisation and 8 million investors presently hold 100 billion rupees ($1.4 billion) in crypto-investments.
Even with pull back on Monday, investors are optimistic about the outlook for Bitcoin's price.
The Tokyo-based chief operating officer of cryptocurrency exchange Liquid, Seth Melamed, said legislation of the sort India is proposing will not be an impediment to further gains for Bitcoin, Reuters reported.
He further said, "Because it's decentralised, government bans or acceptance is somewhat irrelevant," adding, "capital will find a way".
Bitcoin has risen more than 90 percent in 2021, outperforming traditional asset classes, stimulated by mainstream companies and large investors like Tesla, embracing cryptocurrencies.
(With inputs from Reuters.)
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