Bitcoin retreats after record-breaking weekend

Indian crypto ban fears upset Bitcoin surge

After enjoying a record-breaking weekend, Bitcoin retreated on Monday morning.

The world’s leading cryptocurrency rose above $60,000 for the first time in its twelve-year history, reaching a new all-time high of $60,738.

While direct causation is hard to identify, the surge was widely attributed to the $1.9 trn (£1.3trn, €1.6trn) stimulus signed off by US president Joe Biden at the end of last week.

Not only did the package provide up to $1,400 of additional capital for everyday Americans to use at their discretion, it also underlined one of Bitcoin’s most fundamental appealing factors.

Since its inception, the cryptocurrency has been hailed as a potential bulwark against runaway inflation, a safe haven outside the system of central bank intervention.

Indeed, its genesis block famously referenced The Times of London’s headline from January 3, 2009 “Chancellor on brink of second bailout for banks.” The text simultaneously acting as a timestamp and as a political comment.

With over a fifth of all US dollars having been created since the start of the Covid-19 crisis, the crypto’s potential as a digital equivalent to gold free from the inflationary impulses of states has attracted interest from individuals to corporations alike.

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The influence over Bitcoin wielded by nation states was nonetheless highlighted on Monday morning. Following reports that the Indian government is preparing a ban on cryptocurrencies, Bitcoin fell by 9 per cent from its recent record high.

Although trading on India’s most popular exchanges remained essentially unmoved by the threats made by the Reserve Bank of India, the threat of the world’s tenth-largest crypto market soon being shuttered jolted markets.

With absolute causation hard to determine, others have also pointed to the weakening of institutional demand heading into the start of the week and the impulse to take profit following a fresh all-time high.

By late-morning, Bitcoin traded down 6.2 per cent at $56,145. Ethereum stood five per cent lower at $1,764, having briefly threatened its previous all-time high partly on the back of recent NFT buzz.  

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