The sudden sell-off of major cryptocurrencies over the past few days rattled Indian crypto investors with Bitcoin seeing its most significant weekly drop since the November 2022 FTX crash.In the past week, Bitcoin declined 11.5%, hitting $26,023.33 according to Coingecko’s data at 5.30 PM on Monday.Similarly, significant alternative cryptocurrencies like Ethereum fell 9.7%, Ripple’s lost 16.9%, Solana crashed 13.3%, and memecoins such as Dogecoin and Shiba Inu declined by nearly 16%.The broader market was already in a bear phase, but Bitcoin faced an 8% plunge on August 18 as Elon Musk’s SpaceX reportedly divested its Bitcoin holdings, akin to Tesla.102918030SpaceX had accumulated $373 million in Bitcoin during 2021-2022.“Bitcoin’s fall below $26000 last week was the biggest decline for BTC in almost over a year,” said Siddhartha Gupta, SVP, Business and Strategic Alliances, CoinDCX.Simultaneously, investor concerns were heightened by the Federal Reserve’s July minutes suggesting possible interest rate hikes.Moreover, large Bitcoin holders selling off their investments in the futures market and China’s second-largest property developer, China Evergrande, filing for US bankruptcy, added to the uncertainty to the economic landscape.“Market sentiments changed very quickly after the Tesla news and then there was a bunch of negative news which just kept adding to the prevailing uncertainty.It looks like bearish sentiment will remain until there is more regulatory clarity,” said Vishal Gupta, a Noida-based Crypto investor.Many Indian cryptocurrency investors have halted their investments following a 30% tax on crypto earnings enforced by the government.Nonetheless, a minority continues to retain their holdings, though sudden market downturns are compounding the prevailing pessimism.“Due to unfriendly policies of the government, I have sold most of all the crypto I held.It’s not looking good for crypto or any risk asset that is non-productive, does not produce cash flow.Rising interest rates will hit speculative assets the hardest,” said Ashwin Nadar, an avid Mumbai-based crypto tracker.Dhruvil Shah- SVP of Technology, Liminal, a wallet infrastructure and custody solutions platform, said the regulatory uncertainty dampens the enthusiasm within the digital asset community and results in a liquidity crunch in the market.“The second half of 2023 has been a phase of price correction across digital assets, including Bitcoin.The short-term outlook for BTC looks bearish as BTC can correct even further into the 20-25k range in the short term.
We can expect some green shoots by the end of September or the beginning of October this year,” said Shivam Thakral, CEO of BuyUcoin, India’s second longest-running digital asset exchange.Despite the prevailing circumstances, a modest level of trading persisted on Indian crypto exchanges throughout the past week.“There were more sellers last week for stable coin Tether and alt coins—Tron, Rune and Bake.Trading for Bitcoin continued, and we recorded no unusual buy or sell movement,” said Rajagopal Menon, VP, WazirX.Experts suggest that sentiments could potentially reverse in the upcoming months.“The long-term outlook for BTC is looking bullish as we approach the mega event of Bitcoin halving due in May 2024.After the massive sell-off sparked by various macro events, BTC could emerge stronger in the coming months as historically BTC peaks during the October-November period,” said Shah.Crypto investors are keenly watching for three key developments: the outcome of the Grayscale-SEC lawsuit expected soon, a speech by a member of FOMC this week, and the imminent decision from the U.S.SEC on a spot Bitcoin ETF.CoinDCX’s Gupta said the current fall will potentially garner interest from long term investors who missed the opportunity earlier.“However, trader interest will likely be subdued until there is more clarity in terms of where the market would be headed,” he said..
