Bitcoin, the biggest cryptocurrency, fell to $ 47,555 on Friday, falling below the $ 50,000 mark for the first time since March.
Bitcoin and other cryptocurrencies suffered heavy losses on Friday over concerns that US President Joe Biden’s plans to raise capital gains tax will limit investments in digital assets.
Reports on Thursday said the Biden administration is planning to propose a series of changes to the US tax code, including plans to nearly double taxes on capital gains to 39.6% on people with an income of more than $ 1 million.
Bitcoin, the largest and most popular cryptocurrency, has dropped to $ 47,555, falling below the $ 50,000 mark for the first time since the beginning of March. It was last down 4% at $ 49,667.
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The tax plans rocked the market, prompting investors to book returns on stocks and other risky assets, which rose massively in hopes of a solid economic recovery.
Nick Spanos, founder at the NYC Bitcoin Center, said: “Given the high growth in Bitcoin prices, crypto holders who have accumulated profits will be subject to this tax increase. He sees Bitcoin continue to decline in the coming days.
Bitcoin is on track to fall 11.3% for the week, its worst week since the end of February. However, for the year, it is still up 72%.
But while social media popped up with posts about plans to hurt cryptocurrencies and individual investors complained about losses, some traders and analysts said. The drop may be temporary.
“I don’t think Biden’s tax plans will have a big impact on Bitcoin,” said Ruud Feltkamp, CEO at the Cryptohopper automated cryptocurrency trading bot. “Bitcoin has only been bullish for a long time, consolidation is natural. Traders simply make money from the winnings. “
Others are also optimistic about Bitcoin’s long-term prospects, but note that it may take time before the price starts to rise again.
“Investors will see a drop in the price of the cryptocurrency market as an opportunity to expand their portfolio by increasing their investment on average,” said Don Guo, chief executive at Broctagon Fintech Group. and buying new altcoins, ”said Don Guo, chief executive officer at Broctagon Fintech Group. He added that for Bitcoin, investors would see this as an opportunity to buy cryptocurrencies at a lower price.
Cryptocurrency exchange Coinbase shares rose 0.5% to $ 294.86 in early afternoon trading in the United States. The public offering of shares on April 14 saw Bitcoin price rise to $ 65,000, before falling 25% in the following days.
“The Coinbase listing – the last moment for poachers to be exposed – could be a high mark for Bitcoin,” said Neil Wilson, head of market analysis at Markets.com.