Bitcoin rallies over 300% since Sep’20, charts show strong support at $30,000; where will it go from here?
January 14, 2021 3:51 PM
Cryptocurrencies are not legal tender in India, and while exchanges are legal and the government has made it very difficult for them to operate.
Leading bank ICICI Bank already announced blockchain application for transactions with few groups.
By Kshitij Purohit
The Crypto story began in 2010 when one blogger swapped 10000 bitcoins for two pizzas. It was just the start of a new digital era and now digital currencies are widely traded all over the world including India. According to top exchanges of India, Retail investors aged between 25 and 40 are spending millions on trading in cryptocurrency in India every day, According to the country’s largest crypto exchange, WazirX, the company saw 125% increase in user signups in the past six months, while its rival CoinDCX said it saw 85% growth in traders in the last quarter. One can buy a crypto asset like Bitcoin or WazirX for as little as Rs148 right now. Bitcoin has earned tremendous popularity within the world of blockchain and virtual monetary standards. It posted returns of over 9,000,000% since July 2010 and 300% since Sep 2020.
In India, there is no regulator for crypto currency and unregulated cryptocurrency trades and its exchange have postured a great challenge. Cryptocurrencies are not legal tender in India, and while exchanges are legal and the government has made it very difficult for them to operate. However, the central bank has concluded that block chain is indeed a disruptive technology that can potentially revolutionize the financial industry. Finance ministry has also put forward a proposal to impose 18% GST on bitcoin transactions as the think tank suggested that bitcoins can be categorized under ‘intangible assets’ class. There are over 600,000 users in the country who have invested in Bitcoins and estimated 7200 crores annually can be received after levying the same. Leading bank ICICI Bank already announced blockchain application for transactions with few groups while Axis Bank and Yes Bank are in partnership with Ripple to offer cross border payment services.
Technically bitcoin has had a marvelous run from $10000 to $41682. After the 1.25% jump in US yield, highest since March 2020, and strong dollar index as possibility of another round of impeachment on president plunged bitcoin almost by 20% from the high. Investors are booking profits and taking safe positions in the dollar. The bitcoin has strong support near $30000 if we placed Fibonacci levels on the daily chart for the current run and prices will come down as investors book profits after strong bull run. It will remain traders favorite as big institutional investors are buying and exploring the market.
PayPal is also announced to start payment mechanisms in India with bitcoins. The hedge funds are giving edge bitcoin over the gold and taking exposure for their clients. Many regulators have already started writing a regulation for the crypto trading which shows that a major part of the world is going to adopt digital currencies in quick time. Prices may consolidate in between $29000 – $35000 for the sometime but it has a strong future after the entry of the big player in the market to play their role due to fear of missing out.
(Kshitij Purohit is Lead Commodities & Currency at CapitalVia Global Research Limited. The views expressed are personal. Please consult your financial advisor before investing)