Bitcoin, the largest crypto currency, dropped to $ 47,555 on Friday, dipping below the $ 50,000 level for the first time since March.
Bitcoin and other cryptocurrencies posted heavy losses on Friday, on concern that US President Joe Biden’s plan to raise capital gains taxes will reduce investment in digital assets.
News on Thursday said the Biden administration is planning a series of proposed changes to the U.S. tax code, including a plan to nearly double capital gains taxes to 39.6% for people earning more than 1 million. dollars.
Bitcoin, the largest and most popular cryptocurrency, plummeted to $ 47,555, dropping below $ 50,000 for the first time since the beginning of March. The latest fell 4% to $ 49,667.
Smaller rivals Ether and XRP fell 3.5% and 6.7% respectively, while Dogecoin – which was created as a joke for early cryptocurrency users and which had risen by around 8,000% this year. before this latest setback – it dropped 20% to $ 0.21 based on the price and data tracker CoinGecko.
The fiscal plans shook the markets, prompting investors to post profits in equities and other risk assets, which rallied strongly in hopes of a solid economic recovery.
“With a high rate of growth in the price of Bitcoin, holders of cryptocurrencies who have increased their earnings will be subject to this tax increase,” said Nick Spanos, founder of the Bitcoin Center in New York. He sees Bitcoin drop further over the next few days.
Bitcoin is on track for an 11.3% loss during the week, the worst weekly result since the end of February. In the year, however, it still increased by 72%.
But as social media has flared up with posts about the plan hurting cryptocurrencies and individual investors complaining about losses, some traders and analysts have said the drop is likely to be temporary.
“I don’t think Biden’s tax plans will have a big impact on Bitcoin,” said Ruud Feltkamp, CEO of the automated cryptocurrency bot Cryptohopper. “Bitcoin has only been growing for a long time, it’s only natural to see consolidation. Traders are simply cashing out their winnings. “
Others remained optimistic about Bitcoin’s long-term outlook as well, but noted that it may take some time for prices to start rising again.
“Investors will see falling prices in the cryptocurrency market as an opportunity to expand their portfolio by averaging their investment outlay and buying new altcoins,” said Don Guo, CEO of Broctagon Fintech Group. He added that for Bitcoin, investors will see it as an opportunity to buy the cryptocurrency at a lower price.
Shares of cryptocurrency exchange Coinbase rose 0.5% to $ 294.86 in the early afternoon of trading in the United States. The public listing of its shares on April 14 had seen Bitcoin prices soar to $ 65,000, before retreating by 25% in the following days.
“Coinbase’s listing – the last moment the poacher became a gamekeeper – may have been the pinnacle of Bitcoin,” said Neil Wilson, chief market analyst at Markets.com.