Bitcoin and other major cryptocurrencies plummeted on Friday, after details surrounding the Biden administration’s proposed capital gains tax surfaced.
On Friday morning, bitcoin plunged to below US$50,000 for the first time since the beginning of March, after it was revealed that President Biden plans to raise the capital gains tax for those making over $1 million to 43.4%, with the addition of a surtax. Similarly, ethereum fell to around $1,200, while XRP, the fifth largest cryptocurrency, suffered a decline of more than 15%.
The latest tax proposal would help fund several trillion-dollar spending initiatives aimed at addressing shortcomings in the US economy and growing inequality. According to data compiled by CoinMarketCap, the latest liquidation erased over $200 billion of value from the total cryptocurrency market.
The latest news triggered a massive sell-off in markets, as all three major US indices recorded declines by day’s end on Thursday. Now, analysts are beginning to fear that Biden’s capital gains proposal may extend into crypto investors’ sentiment, which has thus far pushed bitcoin prices to new record highs. In the meantime, concerns have been rising over a potential regulatory crackdown on digital currencies, given that back in February, Treasury Secretary Janet Yellen called bitcoin a “highly speculative asset.”
Information for this briefing was found via CoinMarketCap. Thee author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.