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Bitcoin fell from its record highs north of $60,000 to $54,588.83 Monday morning following massive ... [+] liquidations. Market analysts disagree over the source of withdrawals.

It turns out last weeks bitcoin rally to the new record high of $61,923 reached on Saturday, was short-lived, with the crypto descending below 55,000 Monday morning.

The cryptocurrency fell as low as $54,588.83 and made a small bounce to $56,689 at press time, according to cryptocurrency data provider Messari.

The plunge came as a result of an aggressive sell-off as 185,350 trades worth approximately $2.22B were liquidated by crypto exchanges in the last 24 hours, mostly in bitcoin, according to Bybit, a cryptocurrency futures trading and information platform. Binance and Bybit exchanges saw the largest withdrawals. The largest single liquidation order of $18.94 million worth of bitcoin occurred on the Huobi exchange.

Analysts have been suggesting different scenarios behind the dump. According to Justin Barlow, research analyst at cryptocurrency data provider The TIE, a large deposit of roughly 18,000 BTC worth over $1 billion dollars was made to a hot wallet of cryptocurrency exchange Gemini, suggesting that an institutional holder may have been taking profits or exiting the market.

Time of bitcoin deposit to the Gemini exchange

Another data and analytics platform Glassnode refuted speculations about bitcoin inflows into Gemini, saying the reported transactions were internal, made with funds that were already on the exchange's wallets.

The mystery around Gemini gets murkier. Apparently, data providers mislabel Gemini into Coinbase or OKEx because they have different clustering algorithms, tweeted Ki Young Ju, CEO of South Korean analytics platform CryptoQuant.com. What's clear is that it's not an internal transfer, and it went to an exchange user deposit wallet.

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More importantly, according to Barlow, the market saw the news of this transfer and this had an impact whether it was from an internal Gemini wallet or not. While this could be treated by the market as a bearish development, its important to note that miners sold over 112,000 BTC in the first week of 2021 while prices actually rose from $29,000 to $40,000, indicating that this exchange inflow/outflow signal may actually be a bad representation of market sentiment, adds Barlow.

Heavy withdrawals seemed to coincide with a Reuters report Sunday evening that India will propose a law banning trade and possession of digital assets. If signed into law, India would be one of the first major economies to make cryptocurrency holdings illegal.

All the while, a wave of institutional interest continues to signal bullish sentiment. Last week, U.S. largest bank, JPMorgan JPM , revealed a new investment product tied to a basket of stocks offering investors exposure to bitcoin. PayPal PYPL , a major force behind increased cryptocurrency adoption, said its currently in the process of acquiring an Israeli crypto custody firm Curv for an undisclosed amount. Earlier this month, Goldman Sachs GS announced its restarting cryptocurrency trading operations and will begin dealing bitcoin futures within the coming weeks.

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$2.2 Billion Bitcoin Liquidation May Have Caused 10% Correction - Forbes

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(Bloomberg) -- President Joe Biden is planning the first major federal tax hike since 1993 to help pay for the long-term economic program designed as a follow-up to his pandemic-relief bill, according to people familiar with the matter.Unlike the $1.9 trillion Covid-19 stimulus act, the next initiative, which is expected to be even bigger, wont rely just on government debt as a funding source. While its been increasingly clear that tax hikes will be a component -- Treasury Secretary Janet Yellen has said at least part of the next bill will have to be paid for, and pointed to higher rates -- key advisers are now making preparations for a package of measures that could include an increase in both the corporate tax rate and the individual rate for high earners.With each tax break and credit having its own lobbying constituency to back it, tinkering with rates is fraught with political risk. That helps explain why the tax hikes in Bill Clintons signature 1993 overhaul stand out from the modest modifications done since.For the Biden administration, the planned changes are an opportunity not just to fund key initiatives like infrastructure, climate and expanded help for poorer Americans, but also to address what Democrats argue are inequities in the tax system itself. The plan will test both Bidens capacity to woo Republicans and Democrats ability to remain unified.His whole outlook has always been that Americans believe tax policy needs to be fair, and he has viewed all of his policy options through that lens, said Sarah Bianchi, head of U.S. public policy at Evercore ISI and a former economic aide to Biden. That is why the focus is on addressing the unequal treatment between work and wealth.While the White House has rejected an outright wealth tax, as proposed by progressive Democratic Senator Elizabeth Warren, the administrations current thinking does target the wealthy.The White House is expected to propose a suite of tax increases, mostly mirroring Bidens 2020 campaign proposals, according to four people familiar with the discussions.The tax hikes included in any broader infrastructure and jobs package are likely to include repealing portions of President Donald Trumps 2017 tax law that benefit corporations and wealthy individuals, as well as making other changes to make the tax code more progressive, said the people familiar with the plan.The following are among proposals currently planned or under consideration, according to the people, who asked not to be named as the discussions are private:Raising the corporate tax rate to 28% from 21%Paring back tax preferences for so-called pass-through businesses, such as limited-liability companies or partnershipsRaising the income tax rate on individuals earning more than $400,000Expanding the estate taxs reachA higher capital-gains tax rate for individuals earning at least $1 million annually. (Biden on the campaign trail proposed applying income-tax rates, which would be higher)White House economist Heather Boushey underlined that Biden doesnt intend to boost taxes on people earning less than $400,000 a year. But for folks at the top whove been able to benefit from this economy and havent been this hard hit, theres a lot of room there to think about what kinds of revenue we can raise, she said in a Bloomberg TV interview Monday.An independent analysis of the Biden campaign tax plan done by the Tax Policy Center estimated it would raise $2.1 trillion over a decade, though the administrations plan is likely to be smaller. Bianchi earlier this month wrote that congressional Democrats might agree to $500 billion.The overall program has yet to be unveiled, with analysts penciling in $2 trillion to $4 trillion. No date has yet been set for an announcement, though the White House said the plan would follow the signing of the Covid-19 relief bill.An outstanding question for Democrats is which parts of the package need to be funded, amid debate over whether infrastructure ultimately pays for itself -- especially given current borrowing costs, which remain historically low. Efforts to make the expanded child tax credit in the pandemic-aid bill permanent -- something with a price tag estimated at more than $1 trillion over a decade -- could be harder to sell if pitched as entirely debt-financed.What Bloombergs Economists Say...The next major legislative initiative, infrastructure investment, could provide the sort of durable economic gains that not only support higher pay, but promote diffusion of those gains across demographic lines and political persuasions.--Andrew Husby and Eliza Winger, U.S. economistsFor the full report, click hereDemocrats would need at least 10 Republicans to back the bill to move it under regular Senate rules. But GOP members are signaling they are prepared to fight.Well have a big robust discussion about the appropriateness of a big tax increase, Senate Minority Leader Mitch McConnell said last month, predicting Democrats would pursue a reconciliation bill that forgoes the GOP and would aim for a corporate tax even higher than 28%.Kevin Brady, the top Republican on the House Ways & Means Committee, said, There seems to a be a real drive to tax investment of capital gains at marginal income rates, and called that a terrible economic mistake.While about 18% of the George W. Bush administrations tax cuts were allowed to expire in a 2013 deal, and other legislation has seen some increases in levies, 1993 marks the last comprehensive set of increases, experts say. That bill passed on a two-vote margin in the House and required the vice president to break a tie in the Senate.I dont think it is an understatement to say the current partisan environment is more severe than 1993 said Ken Kies, managing director of the Federal Policy Group, a former chief of staff of the congressional Joint Committee on Taxation. So you can draw your own conclusions about prospects for a deal this year, he said.Still, there could be some tax initiatives Republicans could get behind. One is a shift from a gasoline tax to a vehicle-miles-traveled fee to help fund highway projects.Read More: By-the-Mile Vehicle Tax to Help Fund Infrastructure Gains SteamAnother is more money for Internal Revenue Service enforcement -- a way to boost revenue without raising rates. Estimates have found that for every additional $1 spent on IRS audits, the agency brings in an additional $3 to $5.Democrats are also looking to revise tax laws that they say dont do enough to stop U.S. companies from shifting jobs and profits offshore as another way to raise revenue, one aide said. Republicans could potentially support incentives, though its unclear whether theyd back penalties.White House officials including deputy director of the National Economic Council, David Kamin -- who wrote a 2019 paper on Taxing the Rich -- are in the process of fleshing out the Biden tax plans.As for timing, if passed, tax measures would likely take effect in 2022 -- though some lawmakers and Biden supporters outside the administration have argued for holding off while unemployment remains high due to the pandemic.Lawmakers have their own ideas for tax reforms. Senate Finance Committee Chairman Ron Wyden wants to consolidate energy tax breaks and require investors to pay taxes regularly on their investments including stocks and bonds that have unrealized gains.A nurse pays taxes with every single paycheck. A billionaire in an affluent suburb on the other hand can defer paying taxes month after month to the point where their paying taxes is pretty much optional, Wyden told Bloomberg in an interview. I dont think thats right.Warren has pitched a wealth tax, while House Financial Services Committee Chair Maxine Waters has said she would like to consider a financial-transaction tax.Democratic strategists see the next package as effectively the last chance to reshape the U.S. economy on a grand scale before lawmakers turn to the 2022 mid-term campaign.Normally, the party in power gets one or two shots to do major legislative packages, said Chuck Marr, senior director of Federal Tax Policy at the left-leaning Center on Budget and Policy Priorities. This is the next shot.(Updates with White House economist comments in first paragraph after bullet-pointed section.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.2021 Bloomberg L.P.

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Bitcoin Spikes to New Record High Over $61K - Yahoo Finance

Contradictory statements and media leaks are making it impossible to get a handle on Indias soon-to-be-unveiled cryptocurrency policy. The uncertainty is throwing young blockchain firms and programmers into a paroxysm of anxiety: Should they leave or stay? If they hang back, should they do something else with their lives?

On Sunday, the global crypto industry heaved a sigh of relief when Finance Minister Nirmala Sitharaman categorically ruled out a much-feared blanket ban, promising to allow a window for people to do certain experiments using distributed ledger technologies, Bitcoin and other virtual currencies, she said at an India Today conclave.

But before the ink could dry on the congratulatory press releases from entrepreneurs, Reuters cited an official with direct knowledge of the plan as saying that the new law will criminalize possession, issuance, mining, trading and transferring crypto-assets.

That will be nothing short of a second existential crisis in three years. Indias crypto evangelists fought a brave legal fight a couple of them even went behind bars for a short while against the monetary authoritys 2018 diktat to banks, telling them not to allow anyone dealing in digital assets to operate an account. Last year, the nascent blockchain industry won when the countrys highest court set aside the Reserve Bank of Indias order.

Optimism started to rebuild, and surging Bitcoin prices began to lure millennials. When it comes to transferring Bitcoin and other digital assets, India is of late providing more volume than China on popular peer-to-peer platforms.

The risk that India would hit back with a new law to make criminals out of crypto professionals and investors was always present. So practitioners tried to educate policymakers, appealing for sensible regulation starting with definitions for what is a utility token, which digital asset is to be viewed as a security, and which is to be treated as a currency.

Such a dichotomy will be messy in practice. Take international money transfers, where costs pile up because of payment messages that have to laboriously jump national borders by using correspondent banks. To provide value, the service provider will need to employ virtual payment tokens, something that the Philippines and Bangladesh are already allowing. India, the worlds largest recipient of overseas remittances, wont want to miss out.

To see where India might be going with its policy flip-flops, consider something else Sitharaman said at the conclave. A lot of the experiments that fintech firms are doing in blockchain, she said, will be taken up in a big way in the offshore financial center in Gift City in Gujarat, Prime Minister Narendra Modis home state. A startup meet is planned there, she said.

Now, it may be an excellent idea to fill up a ghost town with 20-something programmers since 40-something Mumbai bankers wont go there. Perhaps even the code writers dont have to leave behind the city lights of Bangalore and Hyderabad and head for the boondocks. As long as resident Indian investors are allowed to freely park in Gift City some of the $250,000 theyre permitted to take overseas annually, the offshore center could in theory channel some dollar liquidity to the crypto industry. The domestic banking system will steer clear of crypto. The central banks sway over the rupee would remain intact.

Such a compromise solution will leave the blockchain industry cold. Yes, therell be a sandbox for local fintech to play and learn. But there will be no pathway for enterprises to grow into mature businesses. Thats because when they want to graduate from segregated dollar accounts and enter the mainstream of the domestic economy, theyll bump up against the crypto ban if theres one in place.

Its unclear how exactly authorities will catch people in possession of virtual currencies. The two obvious chokepoints are banks and the telecom network. If someone is using a VPN service to access the internet, and not buying or selling Bitcoin using an Indian bank account (but earning and spending it peer to peer), the prohibition wont be enforceable.

Today, the popular person-to-person payment choice is Bitcoin, which isnt surprising given its $60,000 price tag. After Beijing rolls out its digital yuan in 2022, even the e-CNY could gain international acceptance as a means of payment and store of value. Rather than complain then about Chinese incursions in Indias monetary sovereignty, New Delhi should enact a practical crypto law now.

A regulatory sandbox in Mumbai, where most of Indias financial industry resides, would give the authorities ideas for designing a smart official paperless currency. If they adopt a draconian law out of a fear of money laundering or loss of control on the capital account, transactions will simply go underground. Nobody is asking New Delhi to make Bitcoin legal tender or accept tax payments in it. Just a little tolerance of cryptocurrencies will be enough.

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View: Whats Indias beef with Bitcoin, really? - Economic Times