Suggestions that the Indian government may introduce an outright ban on cryptocurrency could be the trigger behind Bitcoin’s volatile 48 hours and drop below $55,000.
Bitcoin (BTC) was flying only three days ago, setting an all-time-high as it broke $60,000 with conviction.
The price looked like it was preparing to bed in while it gathered support in unchartered territory, but the signs of something being amiss were beginning to show up on the charts in the early hours of Monday morning as New Dehli was waking up.
Rumours of the Indian government’s apparent desire to outlaw cryptocurrency have been circulating for several years, but the fires of disregard to digital assets were being fully stoked this week as news of a draft bill detailing the ban began to emerge.
A tip-off from a senior government official leaked some of the details which suggested anyone found mining or owning cryptocurrency in India would face asset seizures, fines or even prison sentences.
It is understood the bill, if passed, would come with a six-month grace period to allow anyone holding cryptocurrencies time to dispose of their assets.
This potential amnesty, say analysts, is the driving force behind Bitcoin’s tumble from a high of $61,701 on Saturday, to a depth of $54,013 earlier this morning.
The situation in India paints a sudden and dark backdrop to what had been Bitcoin’s brightest spell in the flagship cryptocurrency’s 12-year-history.
After solidifying support above $58,000, BTC looked to be building strongly and preparing to load up with US stimulus cheques in the coming weeks. Coupled with continual adoption from global institutions, the outlook of fresh investment was leaving the majority of commentators in bullish mood.
Few, however, had envisaged the spectre of the Indian government’s hostility towards crypto reappearing to throw a spanner in the works and triggering a flurry of sell orders.
Technical analysts are currently dissecting a mixed bag of information, with a fair split of opinions as to where the gravitational pull on Bitcoin currently sits.
Some suggest there is strong support at $51,000 and $49,500 which could lead to a bounce back up to the weekend’s highs, providing the investment predictions of Americans waving their stimulus cheques at crypto exchanges ring true.
Others claim the charts point to $54,000 being the line of defence that will hold Bitcoin steady.
Of the thousands of lines being drawn on countless charts today, there is no denying the market has taken on a bearish influence as the bulls steel into defensive mode.
Should those defences at $54,000 hold robustly enough to keep any bearish sentiment at bay, the bulls can strengthen and return to attack mode.
The crypto compass is currently in the hands of the Indian government and the American people.