Bitcoin prices have been on a collapse since Mid-December. The prices peaked in at close to $20,000 and have since fallen by over 50% as the current global price is close to $9500. Zebpay, an Indian cryptocurrency exchange went through a major dip and hit the $4000 mark earlier today. However it was just a momentary dip due to panic selling, the prices have since bounced back to $9000.
While many initially suspected this is some sort of a bug or a marketing gimmick from the exchange, it appears that this was due to Indian cryptocurrency traders panic selling their holdings. Bitcoin prices fell to INR 260,000 and are currently priced in around INR 600,000 - which is a rise of over 60% in less than 10 minutes.
Reason for the Zebpay Price Dip
One of the biggest reasons that could be attributed to this Zebpay price dip is the Indian union budget which was announced today. The Finance Minister stated that Bitcoins are not a legal tender
in India. However, this wasn't the first time that he made this statement. In fact, this has been repeated at least on two other occasions in the past month.
However today this statement got much more attention because hundreds of millions of viewers were listening to the Finance Minister Arun Jaitley's speech. It appears that Indian cryptocurrency traders misinterpreted the statement of the Finance Minister and confused 'not a legal tender' with being illegal.
There's a big difference between a currency being declared illegal and one not being a legal tender. When Jaitley said that Bitcoins are not a legal tender in India, it means that the currency is not backed by the Indian government and carries no value in the eyes of the law. It means that unlike fiat currency where the Governor of India's Reserve Bank (RBI) signs that 'I promise to pay the bearer a sum of X Rupees' - there is no such guarantee that comes with cryptocurrencies from the government's side.
Many people mistook this to mean that Bitcoin is now illegal in India. This confusion caused a major drop in the price as Indian traders started to withdraw their Bitcoin deposits. However, it now appears that the price fluctuation has stabilized and Bitcoin is now priced in close to $9000 on Zebpay!