Bitcoin extended it’s decline on Tuesday as a rally that took it past $61,000 over the weekend unwounded, reminding investors of the digital token’s high volatility.
Bitcoin slid by 5.5% on Tuesday and was trading at about $54,300 during early trading hours in Asia.
The cryptocurrency had hit a record high of $61,781.83 on Saturday after U.S. President Joe Biden signed off on his $1.9 trillion fiscal stimuli and ordered an acceleration in vaccinations.
Analysts believe the rise of bitcoin has been helped by the prospects of a steep economic recovery since some investors tend to see the digital currency as a hedge against inflation.
However, the cryptocurrency has been facing trouble from India, where they proposed a bill that would criminalize possession, issuance, mining, trading, and transferring crypto assets. The bill would be in line with India’s stated goal of doing away with private virtual currencies. The country is looking at doing a framework for its own official digital coin.
However, the digital currency has still surged about 1000% over the past year, a mesmerising rally that outstripped more traditional assets like stocks and gold.
JP Morgan Support for Bitcoin
The digital currency continues to receive more support from investors with now, Wall Street giant JPMorgan, after ramping up its cryptocurrency services over the last year, is exploring bitcoin and cryptocurrency clearinghouse options, looking for an intermediary to sit between OTC desks and traders to guarantee the enforcement of trade and create liquidity in the market.
Clearinghouses, designed to sit in between trades to guarantee payment in the event either counterparty defaults, ensure trading desks can handle orders.
“Cryptocurrency brokers and exchanges need to avoid the kind of liquidity problems that trading app Robinhood ran into,” the JPMorgan executive said.
Earlier this month, Goldman Sachs said it would relaunch its bitcoin and cryptocurrency trading desk after a three-year hiatus, reviving support for bitcoin futures trading.