Bitcoin and other cryptocurrencies suffered heavy losses on Friday due to fears that US President Joe Biden’s plan to raise capital gains taxes will limit investment in digital assets.
The sale came after reports that Biden the administration is planning a set of proposed changes to the U.S. tax code, including a plan to nearly double capital gains taxes to 39.6 percent for people earning more than $ 1 million (approximately 7.4 crores).
Bitcoin, the largest and most popular cryptocurrency, collapsed by 5%, falling below the price of $ 50,000 (approximately Rs. 3.6 crore) for the first time since early March, while smaller rivals Ether and XRP fell about 7 percent.
Tax plans shook markets, prompting investors to record gains on stocks and other risky assets, which united en masse in hopes of a stable economic recovery. Taxes on investment gains are reported to be in line with a record increase.
“Bitcoin is heading south today after President Biden signaled that he wants to raise capital gains tax in the United States,” said Jeffrey Halley, senior market analyst in the Asia-Pacific region at OANDA. “Now, whether it happens or not. , many bitcoin investors are likely to sit on significant capital gains if they stay in the exchange rate in the last year. “
“I firmly believe that advanced market regulation and / or taxation remain the Achilles’ heel of crypto markets,” he added.
Bitcoin is about to lose 15 percent during the week, although it is still growing by 65 percent since the beginning of the year. Ether fell more than 10 percent during the day to just $ 2,107 (approximately Rs. 1.5 lakhs), a day after rising to a record $ 2645.97 (approximately Rs. 2 lakhs).
But as social media reported on the plan, which hurts cryptocurrencies, and individual investors complained of losses, some traders and analysts said the decline was likely to be temporary.
“I don’t think Biden’s tax plans will have much of an impact on bitcoins,” said Ruud Feltkamp, chief executive of the automated cryptocurrency bot Cryptohopper. “Bitcoin has only been up for a long time, it’s only natural to see consolidation. Traders are just cashing in on profits.”
Others also remained upward about Bitcoin’s long-term outlook, but noted that it could take time for prices to rise again.
“There is reason to believe that the overall trend will remain upward unless the price falls below $ 40,000,” said Ulrik Lieke, chief executive of crypto hedge fund ARK36. “We are not currently convinced that the trend will turn to a bear market, but we recognize that it may take some time before demand exceeds supply again in the medium and short term.”
Shares of the cryptocurrency exchange Coinbase also fell about 4% to $ 282 (approximately 21,100 rupees) in US market trading, marking the lowest level since its announcement earlier this month. The listing raised bitcoin prices to $ 65,000 (approximately Rs. 48.7 lacquers) before withdrawing 25 percent in the coming days.
“Coinbase’s list – the high point at which the poacher became a player – may have been the high watermark for bitcoins,” said Neil Wilson, chief market analyst at Markets.com.
© Thomson Reuters 2021