The previous month or so has been terrible for cryptocurrency investors with the world biggest digital currency Bitcoin falling to below $40000, and the same has happened to other cryptocurrencies like Ethereum, Dogecoin, Litecoin, and Binance among others.
This fall was attributed partly to Elon Musk’s comments about cautiously investing in cryptocurrencies, hyping Dogecoin in the process, and later announcing that his car-making company Tesla Inc. will no longer accept Bitcoin as payment citing environment concerns. According to Musk, Bitcoin mining processes emit a measurable amount of carbondioxide that is harmful to the environment.
If Bitcoin keeps tumbling in the digital currency marketplace, it will hit its worst month since 2011. However, as most times every bad thing comes with a good thing, one popular investor says that the dip is a good thing.
“Bitcoin crashing. Great news. When price hits $27,000 I may start buying again. Lot will depend upon global-macro environment. Remember the problem is not gold, silver, or Bitcoin. Problem are the incompetents in government, Fed & Wall Street. Remember gold was $300 in 2000, tweeted Robert Kiyosaki, author of New York Times bestseller “Rich Dad, Poor Dad.”
Kiyosaki’s point is understandable in a sense that whereas Bitcoin’s price surge was good for investors, the high price kept away small investors that would like to buy the digital asset couldn’t because of the high price.
Now that its price is lower, there are multitudes of people that are looking forward to buying it, which is popularly referred to as “buying the dip” with the hope of the price going back up soon and get a return on their investment.
Last month, Kiyosaki predicted in an interview that bitcoin’s price would rise to as high as $1 million in the next five years although he said he prefers investing in gold and silver because he feels it is “God’s money.”
I reported last week that gold futures rose above the $1,900 mark, and it has stayed that high since then, up 8% this month. In the same month of May, silver is trading above $28, which is also up about 8%. The reason for this rise? Icrease in inflation expectations and decrease in real yields, as analysed by Peter Grosskopf, Chief Executive Officer of Sprott.
“Gold has recently been benefiting from a downward move in real yields, driven primarily from an increase in inflation expectations and related concern over the purchasing power of the dollar,” Grosskopf told MarketWatch.
Kiyosaki is an outspoken critic of the Fed, the Treasury Department and the Biden administration, calling them “losers” and socialists, and predicting the demise of the dollar.
Cryptocurrency prices alternated moderately over the Memorial Day weekend, avoiding what some fear-filled investors had predicted as a “bloody” weekend of bearishness.
While bitcoin fell about 5% on Saturday, it rebounded Sunday and was up about 4% over the previous 24 hours, as of Sunday evening, trading in a range between $33,000 and $37,000. Currently, Bitcoin is trading at $36,959.60.
Similarly, Ethereum prices similarly slid about 6% Saturday and recovered Sunday, up more than 5% over the previous 24 hours. Ethereum is currently trading at $2,611.30.
Elon Musk’s favourite, Dogecoin also bounced around Saturday and Sunday, and prices were last about even with Friday’s end of session. Dogecoin is currently trading at $0.31.
It should be noted that cryptocurrencies trade 24 hours a day including Memorial Day on Monday, and each day’s session ends at 5 p.m.
May has not been a good year for Bitcoin investors and the fact that it has ended will come as a breather to them, with hopes that June will be better and move their cryptocurrency portfolio from red to green. In May, bitcoin is down more than 37%, its worst monthly performance since September 2011. Bitcoin prices later bottomed out around $2 in October 2011. Since the digital currency hit all-time highs of $65,000 in mid-April, it has plummeted about 45%.
Despite a rough couple of months, bitcoin is still up 24% year to date, and up about 270% over the past year.
India planning to introduce digital Rupee, ban other cryptocurrencies
Just as it is in most countries, cryptocurrency is not a legal tender in India even though Indians can still buy cryptocurrencies through crypto exchanges. The fact that there is no official regulatory framework in India is barring crypto innovation.
In April 2018, the Reserve Bank of India (RBI) banned banks and other financial institutions from supporting, facilitating, and accepting cryptocurrency transactions citing reports that cryptocurrencies were being used for fraudulent activities.
However, in March 2020, the Supreme Court of India said the ban was unconstitutional, and rather recommended in a statement that that cryptocurrency can be accepted as a valid payment for legal transactions, and the payment system can be regulated by the RBI.
According to various reports, Indian citizens currently hold around INR 10,000 Crore (US$1.5B) in cryptocurrencies.
Now that the RBI cannot completely ban cryptocurrencies due to the Supreme Court ruling, the government of India has now decided to form a new panel to analyse the possibility of regulating cryptocurrency in India.
It has been reported that the new panel will consider using blockchain technology, new approaches to cryptocurrency as a digital asset instead of currency, and examine ways to operationalize the RBI’s proposal for its own digital rupee, through a bill.
The proposed bill, called the ‘Official Digital Currency Bill – 2021’ is the proposed crypto regulation that if passed, will suspend all private cryptocurrencies in use today and pave way for designing of an “official digital currency” by RBI. This bill was introduced in the Parliament’s Union Budget session, this year.
Before the RBI launches its own digital currency, Indian investors will be given three to six months to exchange their existing private crypto coins.
RBI’s Official Cryptocurrency
The RBI has given a statement that it is considering a Distributed Ledger Technology (DLT) in order to improve the market structure, as it will potentially roll out a legal central bank-regulated digital currency (CBDC) with the government’s support.
“A fiat currency cannot have the kind of volatility and fluctuations you will see in Bitcoin and other cryptocurrencies. We have an open mind. We are very open to a digital currency, the RBI is working on that”, stated the RBI official.
This bill has both opponents and proponents. The government wants to regulate the use of cryptocurrency in India, but investors want to be given the freedom to choose which cryptocurrency to invest in and trade with.
PS: Cryptocurrency prices quoted in this article can change any time.