Bitcoin falls under the 50K mark for the First time since March. This is largely being attributed to a proposal by the US president to double the capital gains tax for the highest tax bracket.
In many weeks this is the first time that Bitcoin has fallen below $50,000. Bitcoin fell in value by almost 10% as it trades at approximately $49,281. Ethereum too saw an overall drop of 11% as it fell to $2,202.05 while XRP took a hit of 22%
This fall has come after President Joe Biden proposed doubling the tax on capital gains. The proposal was said to reduce appetite for risk across the markets and Bitcoin has taken a bit of nosedive as a result.
This has made investors and the public, alike, question which way the token is going to move now, upward or downward. This price movement is part of the longer leg down that is being seen right now. Generally, 20% pullbacks are seen, where they go up for a while and then come back down. This is historically how the Bitcoin price is done since its inception way back in 2009 so this is not something news. Although there is some connection with news from Joe Biden and the proposed tax law that could go into effect next year. It is still a proposal this time so everyone is just spooked. There was selling-off in the traditional markets as well. But across the board, it’s kind of sad news for Bitcoin investors trying to get some more coins under their belt.
It is not just the rational market acting to the news but there are some other factors too at play. There’s nothing rational about the crypto market as is seen by the price of doge that almost touched the $1 mark a week back. But it does make sense that people are getting spooked by suggestions that the US is going to see big hikes in capital gains taxes. It’s like the worst tax law for cryptocurrency. And it doesn’t make any sense because people are using this as currency; they are doing forex trading essentially.
This is kind of a hint towards the notion that Bitcoin and cryptocurrency can be crippled by government regulation. As soon as talks about capital gain hikes started, all the prices of some major tokens plummeted. Obviously, that is not going to kill Bitcoin or any other token and in fact, it is going to bounce back stronger than ever. Analysts and traders have been expecting this market correction because Bitcoin has had such a big booming bull market for the last few months. So while everyone was expecting this to happen, now that it is happening people are tying it to the capital gain hikes.