Bitcoin and other digital currencies fell sharply on Friday, as a wave of selling followed President Joe Biden’s proposed capital gains tax hike. According to Coin Metrics info, Bitcoin was down 7.3% at $49,730. It’s the first time since early March that bitcoin has fallen below $50,000. Ether fell by 8% to $2,320. The fifth-largest cryptocurrency, XRP, has dropped 16% in value. Late Friday, Bitcoin rose above $51,000 for the first time. According to data from CoinMarketCap, this wiped out more than $200 billion from the cryptocurrency market.
President Biden is set to increase the long-term capital gains tax to 43.4%, plus a surtax, for the richest Americans. This is higher than the top federal tax rate on wages. Returns on assets kept in taxable accounts for more than a year, will be subject to the new tax rate. This started a short-term auction in monetary business sectors, with each of the three major U.S. lists completing Thursday’s meeting in the red. Fears about Biden’s capital gains tax plan are spreading to crypto investors, according to analysts, who have had a fantastic year with bitcoin’s price rising more than sixfold in the last year. Despite this, one cryptocurrency entrepreneur believes Biden is helping his business.
“It would bode well to acquire against your resources for getting away from capital additions charges,” Antoni Trenchev, prime supporter of crypto moneylender Nexo, said. “Additionally, what best protection over Bitcoin, which appreciates in regard amidst the current worth drop, which is undoubted in view of the said recommendation?“ Bitcoin has gained 66% in 2021 alone, while ether — the Ethereum blockchain’s digital token — has increased by more than 200%. The increased purchasing of bitcoin by institutional investors has contributed to some of that funding. Bitcoin has also been purchased in large quantities by companies such as Tesla and Square. Banks are now attempting to encourage their customers to invest in bitcoin.
However, the market is also clouded by fears of a regulatory crackdown on bitcoin. Governments can stifle the use of bitcoin and other cryptocurrencies, according to Jesse Powell, CEO of a major cryptocurrency exchange called Kraken. According to Reuters, India is considering enacting legislation that would prohibit the trade or possession of cryptocurrencies. Bitcoin was dubbed a “highly speculative asset” by US Treasury Secretary Janet Yellen in February, who expressed concern about possible investor losses.
Authorities from all over the world are studying how to control bitcoin. Last week, the People’s Bank of China’s Deputy Governor referred to bitcoin as an “investment option,” signalling a change in the country’s attitude toward cryptocurrencies following a harsh crackdown by regulators in 2017 and 2018.
