Friday saw a sharp value decline in Bitcoin and other cryptocurrencies, followed by the United States President Joe Biden’s plan to increase capital gains taxes that can potentially curb investments in digital assets.
The Biden administration is planning to bring changes to the US tax code, according to news reports. Furthermore, there is also a plan to double the taxes on capital gains to 39.6 percent for people with more than $1m income.
Bitcoin dropped to $47,555 from $50,000 for the first time since early March, while Ether and XRP fell 3.5% and 6.7%, respectively. Dogecoin, the meme coin which was nothing short of a joke and surged to 8,000 percent this year, was down 20% at $0.21, according to CoinGecko, a price and data tracker.
The tax plans came as a shock to the markets and urged investors to book profits in stocks and other such assets, which so far rallied in the hope of a solid economic recovery.
“The soaring rate of Bitcoin price will affect the crypto holders with burgeoned gains,” said Nick Spanos. The founder of Bitcoin Center NYC. He also predicted the further falling of Bitcoin. Bitcoin suffered an 11.3 percent loss on the week, the worst weekly since late February. But as a year, it is up 72%.
Social Media ran high with posts on the cryptocurrencies suffering due to the plan, and investors also complained about losses. Some traders and analysts are predicting the declines to be temporary.
Biden’s taxes plans won’t crush Bitcoin as much, according to Ruud Feltkamp, CEO at automated crypto trading bot Cryptohopper. He stated that Bitcoin had been only rising for the longest, and it is natural for it to see some downs. Traders are just cashing in on their winnings.
The others continued to remain bullish on Bitcoin’s future prospects but also expected it to take long before its prices rose again. There will be a price drop across the crypto market. It is a golden opportunity for investors to widen their portfolio by averaging up their investment outlay and taking in new altcoins, according to Don Guo, CEO at Broctagn Fintech Group. He further added that Bitcoins drop is an opportunity for investors to buy it.
Coinbase shares were up to 0.5% at $294.86 earlier in the day at US trading. Bitcoin prices rose to $65,000 before dropping 25% in the following days. The chief market analyst at Markets.com, Neil Wilson, said that the Coinbase listing is potentially a high watermark for Bitcoin since it was the ultimate poacher-turned gamekeeper moment.