The digital currency sell-off is accelerating. Bitcoin has fallen below the $ 50,000 level. The reasons for this appear to lie in the US tax plans.
Bitcoin price fluctuates wildly, as is the latest price slide.
Photo: Chestnot (Getty Images)
The loss in value is impressive. Bitcoin has dropped below $ 50,000 for the first time since March 8th. On Friday alone, the sell-off caused prices to drop by nearly 6 per cent.
According to Coinmarketcap data, Bitcoin’s market cap has decreased by about CHF 275 billion. Before that, the price increased significantly. By Easter, the market value of all digital currencies was The total value has exceeded $ 2 trillionBitcoin broke the $ 1 trillion mark in April.
Cryptocurrencies like Bitcoin have been under selling pressure since the start of the week. In related forums, reports are running around that the United States wants to escalate measures against the use of cryptocurrencies for money laundering. Speculation about this pushed the bitcoin price to around $ 51,500.
At the end of the week, the drop in prices accelerated. On Friday, Bitcoin broke the $ 50,000 mark for the first time since the start of March. Once again, the reason for this appears to lie in the plans of the US government.
The rich have to pay more taxes
According to the Financial Times, US President Joe Biden is promising tax increases for the wealthy. According to the report, the government wants US citizens whose income exceeds $ 1 million to tax their capital gains and dividend income through regular income tax in the future. Meanwhile, the US government plans to raise the income tax from 37 to 39.6%.
The US tax plans may have deterred some investors.
Planned tax increases, in conjunction with a special tax on capital gains from the Obama era, will increase capital gains taxes for wealthy US citizens to 43.4%.
“Some investors could have been deterred by the US tax plans,” says Raphael Huber, senior analyst at Bitcoin Suisse. However, he does not consider the latest price correction a cause for concern. “This is a normal price correction, as we have seen from time to time,” the expert said.
70% price increase
Plus, there’s still one big plus to a longer period of time: Bitcoin’s value has increased by nearly 70 percent since the end of the year. “Therefore, it is possible that the institutional investors were simply reaping the profits,” Hopper says.
Daniel Demers of crypto SNGLR Group shares this view. “Professional investors like family offices behave differently than fans of cryptocurrencies. These hold their investment for a long time, and professional investors sometimes get the profits.
“Bitcoin price will always fluctuate drastically.”
There will still be a number of professional investors standing on the sidelines waiting for such a slide to happen. “As an investor, however, you should not forget that unlike other investments such as stocks, Bitcoin does not have a fair value.” In other words, the value of the cryptocurrency is as much as investors think it is worth. “Therefore, the bitcoin price always fluctuates greatly,” the expert notes.
However, Bitcoin’s governance has been stable for years; In other words, there is no risk that the sudden creation of new Bitcoins will cause large amounts of cryptocurrencies to flow into the market and devalue. And the blockchain on which Bitcoin is based has been reliably operating for ten years now. Therefore, professional investors are now increasingly investing a portion of their money in cryptocurrencies. Even if it’s not out of order Weak nerves It is, as the last price segment shows.
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