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    Indian investors wary of buying the dip as crypto crashes again

    Synopsis

    Cryptocurrency prices, including those of Bitcoin, Ethereum and Solana slid 8-10% today as a result of a proposed ban on cryptocurrencies in Russia and the fall in the US stock markets.

    Bitcoin thumbETtech
    Mumbai: Cryptocurrencies tumbled for the second time in less than a month, triggered by the Russian Central Bank’s proposal to ban the use and mining of cryptocurrencies, even as the overhang of tighter monetary policy by central banks continued to push the markets into bear territory.

    On Thursday night, Bitcoin plunged to $ 38,242—its lowest price in the last six months.

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    At 5 PM on Friday, the world’s largest crypto by market cap was trading at $39,023 on Coinbase, down by over 15 percent since the beginning of the year.

    The major alt coins have also fallen sharply, with at least a 8% drop in the last 24 hours: Ethereum was trading at $2878 (-8.71%), Solana was down by 9.15% at $123.71, Binance Coin fell by 8.89% to $ 426 while Cardano dipped by 8.90% to touch $1.23.

    Dogecoin slipped 6.62 % to 15 cents while the other popular meme coin Shiba Inu slid 7.55% to $ .00002570.

    According to Coinbase, the overall market was down 6.92%.

    Crypto experts say that talk about interest rate hikes by key central banks, especially the US Federal Reserve, is denting the appeal of digital assets as cautious investors have started looking for safe havens and are cutting down on their exposure to the volatile asset class.

    Unlike other dips, when Indian buyers are inclined to buy, there was caution amongst crypto investors and traders, and the intensity of buying was lower compared to previous dips, according to Indian crypto players.

    "The buying intensity is definitely lower than the last several months. But this has less to do with India and more to do with global crypto sentiment," said Nischal Shetty, co-founder of WazirX. "Indian investors are cautious. They’re taking the 'wait and watch' approach."

    As volatility rises, investors are cautious and trying to gauge what direction the market will take in the coming weeks.

    "Observing the market has made me sure that one should only invest money they are willing to lose. I understand that you can’t rely on crypto as a legitimate investment. The sentimental dip in the stock market is much shorter compared to crypto, which seems to be purely based on demand and supply and lacks any fundamental backing," said 20-year-old Mrityunjaya Lala, who has been a crypto and stock market investor for over two years.

    Crypto experts say that Bitcoin has been sitting at a thin support level for some time, but a broader sell-off in the Asian markets has made the crypto market jittery for the second time this month.

    "The selloff is in line with what we are witnessing in other asset classes like equities," said Edul Patel, founder and CEO of Mudrex, a crypto investment platform.

    Minal Thukral, executive vice president, growth and strategy at CoinDCX, said that such market movements were part of the cycle, and the sell-off was not surprising.

    Also, the US SEC has rejected the listing of a spot bitcoin ETF by Skybridge, which may have created negative sentiments in the market.

    "Altcoins like Ether are also down by 10%, along with 1st layer coins like Cardano and Solana which hints towards a broader sell-off. Though bitcoin is down 40% from its all-time high of nearly $69K in November last year, it is still up by 4X if you look at the past 2 year returns, " said Charles Tan of Coinstore.

    The Russian Central Bank’s proposal impacted the market given that Russia is one of the biggest crypto-mining nations in the world.

    The bank said digital currencies could pose a threat to the country's financial stability.

    Many countries, including India, have been trying to bring in legislation pertaining to crypto, but so far there hasn’t been a comprehensive bit of regulation by any regulator across the world.
    ( Originally published on Jan 21, 2022 )
    The Economic Times

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