On Friday, Bitcoin and other cryptocurrencies suffered huge losses due to fears that US President Joe Biden’s plan to raise capital gains taxes would restrict investment in digital assets.
There are reports that the Biden administration is planning a series of proposed changes to the U.S. tax law, including a plan to nearly double the capital gains tax on incomes of more than $1 million (approximately Rs 740 crore) to 39.6%.
Bitcoin is the largest and most popular cryptocurrency, falling by 5% for the first time since early March, falling below the $50,000 (approximately 360 crore) mark, while smaller rivals Ethereum and XRP fell by about 7% .
The tax plan has shaken the market, prompting investors to profit from stocks and other risky assets, which have risen substantially in the hope of a steady economic recovery. According to reports, the taxation of investment income is in line with the record growth.
Jeffrey Halley, senior market analyst for OANDA Asia Pacific, said: “After President Biden hinted at raising the U.S. capital gains tax, today Bitcoin is heading south.” “It doesn’t matter whether it happens or not, if they persist in the past year, Many Bitcoin investors may get some substantial capital gains from it.”
He added: “I firmly believe that developed market regulation and/or taxation are still the Achilles’ heel of the crypto market.”
Bitcoin is expected to fall by 15% this week, although it is still up 65% since the beginning of the year. Ether fell more than 10% that day, as low as US$2,107 (approximately 150,000 rupees), a day after climbing to a record high of US$2645.97 (approximately 200,000 rupees).
However, despite social media being flooded with posts about the plan’s damage to cryptocurrencies and individual investors complaining about the losses, some traders and analysts said that the decline may be temporary.
Ruud Feltkamp, CEO of Cryptohopper, an automated crypto trading robot, said: “I don’t think Biden’s tax plan will have a significant impact on Bitcoin.” “Bitcoin has only risen for a long time. It is natural to see a merger. Transactions People are just using profits to make money.”
Others are still optimistic about Bitcoin’s long-term prospects, but point out that it may take a while before prices start to rise again.
Ulrik Lykke, executive director of crypto hedge fund ARK36, said: “There is reason to believe that unless the price drops below $40,000, the overall trend will remain bullish.” He said: “At present, we are not yet sure that this trend will turn into a bear market. , But we admit that in the short to medium term, it may take some time for demand to exceed supply again.”
In pre-market trading in the United States, the share price of cryptocurrency exchange Coinbase also fell by about 4% to US$282 (approximately Rs 21,100), the lowest level since its listing at the beginning of this month. After the listing, the price of Bitcoin rose to $65,000 (approximately Rs 4.87 million), and fell by 25% in the following days.
Neil Wilson, chief market analyst at Markets.com, said: “The listing of Coinbase – the moment when poachers turn into gamers – may be the highest level of Bitcoin.
Thomson Reuters 2021 ©