Bitcoin lost ground against the US dollar yesterday for the second consecutive day, falling by 5.70% to the $55,644 level. Other cryptocurrencies also lost ground, including Ethereum, which dropped by 3.03% against the dollar, falling to the $1,793.09 level. Dogecoin also fell by 2.59% and closed the session at the $0.056990 level.
Some analysts believe this is happening because some investors are taking profits after the recent rally. In any case, many are enthusiastic about the future of cryptocurrency, especially now that the US government is delivering stimulus checks, which some believe may trigger inflation levels. Nevertheless, some correction is expected since cryptocurrencies have been rallying so much in a relatively short period of time. If crypto keeps falling, therefore, it should not be surprising for traders, at least at this point.
“There will certainly be some correction in Bitcoin and other cryptocurrencies because they have rallied so much in a short period of time,” said an analyst at Bitkub Capital Group Holdings. “The long-term outlook remains very bullish, as many more leading financial institutions are considering adopting cryptocurrencies,” he added, referencing the fact that big companies like Tesla and MasterCard announced their decision to adopt Bitcoin, and market movers like Elon Musk have backed cryptocurrencies.
Is India Banning Bitcoin?
Some fears have been spreading across the markets after Indian government officials announced a bill in parliament that would ban cryptocurrencies. The bill, which would need to be approved first, would make individuals who either hold, transfer or mine cryptocurrencies liable for up to 10 years of jail.
Some top Indian officials have described cryptocurrencies as a “Ponzi scheme”, while promoting the creation of an official digital currency.
Investors' concerns were eased by Finance Minister Nirmala Sitharaman's latest comments about the issue. Sitharaman said that the Indian government is not closing its mind to crypto alternatives and that it is taking a very calibrated position on the issue.
The Indian government is not alone in considering restricting cryptocurrencies. China, for example, is looking to restrict cryptocurrency mining given its high energy consumption and the government's aim to adopt carbon-neutrality by 2060.
This morning, Bitcoin has continued losing ground against the US dollar. By 11:28 GMT, it fell by 1.52% to the $55,605.4 level.