Bitcoin, the world's largest cryptocurrency, tumbled to an 18-month low of under $25,000 as investors were spooked by rising US inflation.
The price of Bitcoin sank over 10% to $24,658 on Monday. The crypto has tanked 64% after reaching an all-time high of around $69,000 in November last year. Ether, the second-largest cryptocurrency, fell 9% at its 15-month low to $1,309.
The global cryptocurrency market cap fell 11.76% to $970 billion on Monday, according to CoinMarketCap data. The total crypto market volume, however, rose 56% to $132 billion.
The drop in prices of cryptocurrencies comes amid a broader selloff in global equity markets. Indian equity benchmarks – the Sensex and the Nifty 50 – dropped 2.6% each on Monday.
Avalanche plunged more than 15%, exiting from the top 15 tokens while Solana, Cardano and XRP plunged about 11% each. Dogecoin fell over 13% to $0.056.
This comes at a time when central banks of different countries are pushing to adopt the national digital currency mechanism. In India, the Reserve Bank of India (RBI) is working to launch the country's central bank digital currency (CBDC) in FY23.
The RBI has proposed to adopt a graded approach to introduction of CBDC, going step by step through stages of proof of concept, pilots and the launch.
The Union Budget 2022-23 had proposed a hefty 30% tax on profits from digital assets and a 1% TDS on all transactions involving such assets from April 1, 2022. Any losses from sale of digital assets cannot be offset against other income.
In May, economic affairs secretary Ajay Seth said the consultation paper on cryptocurrencies is complete and it will soon be submitted by the government.
"Our consultation paper is fairly ready. We have gone into a deep dive in this. We have consulted not just the domestic institutional stakeholders but also the World Bank (WB) and International Monetary Fund (IMF). We will soon be in a position to finalise our consultation paper," Seth said, adding that the government is beginning work on some global regulations on cryptocurrencies.
"The countries that chose to prohibit crypto can't succeed unless there is a global consensus around that. If there is a global consensus around the regulations, then there has to be a broad framework of participation of countries," he said.
The government last year listed a bill to prohibit private cryptocurrencies. The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, however, hasn't been tabled yet in the Parliament.