The price fall of Bitcoin happened after the President of the United States Joe Biden mentioned the implementation of a tax reform that would concern the rich citizens of the country.
Digital currencies’ prices have experienced a major drop in the last 24 hours. Bitcoin has fallen to $47,467.91 which is over 10%. The chart was red-colored for other cryptos as well, with ether that dropped more than 11% and XRP at 20%.
For bitcoin to reach $50k and stay above it is a major psychological mark. Now that this key support has been pushed below this zone, it may affect investor’s trust until the cryptocurrency goes into the correction area.
“The cryptocurrency was already on the defensive, having breached the long-held 50-day SMA support earlier this week. The tax news invited more profit-taking.”Pankaj Balani, co-founder and CEO of Delta Exchange
Biden plans to increase the top marginal income tax rate from 37% to 39.6%. He also thinks of increasing taxes on capital gains to 39.6% for everyone who earns over $1 million. The digital currency market has always been very sensitive to tax augmentations. For example, in the United States, crypto is considered an asset by the IRS, and taxpayers have to declare every transaction they make.
“It is clear that bitcoin is more sensitive to capital gains tax threats than most ‘asset’ classes. The threat of regulation, either directly in developed markets or indirectly via the taxman, has always been crypto’s Achilles’ heel, in my opinion.”Jeffrey Halley, market analyst at Oanda
Jeffrey Halley, a market analyst at Oanda, speculated not long ago that the price of bitcoin might fall to $42,000 this or the week that follows.
“Hopefully, we will hear as many ‘experts’ saying this is a sign of bitcoin becoming a ‘maturing mainstream asset’ if it falls 10% this weekend, as we do when it rises, or a crypto exchange chooses to IPO.”Jeffrey Halley, market analyst at Oanda