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Reasons for recent volatility in Cryptocurrencies

In our view following are the Reasons for recent volatility in Cryptocurrencies:

Bitcoin markets operate 24/7, setting the stage for price swings at unpredictable hours.
Many point to bitcoin's volatility as untenable. Indeed, Bitcoin makes severe and dizzying swings.

Elon Musk:

Bitcoin had been under pressure after a series of tweets last week by billionaire Tesla Chief Executive and cryptocurrency backer Elon Musk, chiefly his reversal on Tesla accepting bitcoin as payment.

China:

In addition, on Friday China cracked down on mining and trading of the largest cryptocurrency as part of ongoing efforts to prevent speculative and financial risks. China's Financial Stability and Development Committee, chaired by Vice Premier Liu He, singled out bitcoin as the asset it needs to regulate more. The statement, which came days after three Chinese industry bodies tightened a ban on banks and payment companies providing crypto-related services, was a sharp escalation of the country's push to stamp out speculation and fraud in virtual currencies.

U.S. Treasury Department:

China's latest campaign against crypto came after the U.S. Treasury Department called for new rules that would require large cryptocurrency transfers to be reported to the Internal Revenue Service, and the Federal Reserve flagged the risks cryptocurrencies posed to financial stability. 

Conclusion:

From India perspective, overall, I still belive that Cryptocurrencies have a brilliant future. In finance, there's the small ticket instant collateralized loan. Or the concept of securitization of loans through tokens is absolutely awesome (could happen entirely outside of crypto but it adds an internationalization layer). Or bill discounting - imagine TREDS financing, bill pools securitized, and those securities as tokens, with a strong data transparency framework. Tokens only to avoid insane bank fees on currency (Strong KYC  is a MUST etc.)

DISCLAIMER

The contents of this article are for information purposes only and do not constitute an advice or a legal opinion and are personal views of the author. It is based upon relevant law and/or facts available at that point of time and prepared with due accuracy & reliability. Readers are requested to check and refer relevant provisions of statute, latest judicial pronouncements, circulars, clarifications etc before acting on the basis of the above write up.  The possibility of other views on the subject matter cannot be ruled out. By the use of the said information, you agree that we are not responsible or liable in any manner for the authenticity, accuracy, completeness, errors or any kind of omissions in this piece of information for any action taken thereof. CA Mitesh and Associates is Mumbai's leading Cryptocurrency Taxation Firm which is committed to helping people navigate complex tax laws and banking regulations. Our main aim is to assist the individuals with applicable laws & regulations compliance and providing support at each & every level to make sure that they stay compliant and grow continuously. For any query, help or feedback you may get in touch here - Appointment with CA

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