Bitcoin and other cryptocurrencies headed for their worst week in more than a year on concern over proposal to increase long-term capital gains tax from around 23% to around 43% by U.S. President Joe Biden.
Biden administration is planning a raft of proposed changes to the U.S. tax code for people earning more than $1 million. Bitcoin, the biggest and most popular cryptocurrency, slumped five per cent to $48,8867, falling below the $50,000 mark since early March, while smaller rivals Ether and XRP fell around seven per cent.
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The tax plans jolted markets, prompting investors to book profits in stocks and other risk assets, which have rallied massively on hopes of a solid economic recovery. Levies on investment gains were reported to be in line with record increases.
A lot of investors who are holding crypto will look to sell and Bitcoin is one of the first ones that will be offloaded.
According to Investing.com, as markets around the world turned volatile in April, a lot of investors turned toward Bitcoin pushing the value of the flagship cryptocurrency to record levels. It crossed $64,800 for a brief period of time.
“Bitcoin headed South today after President Biden signalled that he wanted to raise capital gains tax in the US,” said Jeffrey Halley, senior market analyst, Asia Pacific, at OANDA. ”
“I firmly believe that developed market regulation and/or taxation remain the crypto markets’ Achilles Heel,” he added. Bitcoin is on track for a 15 per cent loss on the week, though it is still up 65 per cent since the start of the year.
But bitcoin has been one of the best-performing assets in recent years, anyone who bought a year ago is sitting on a nearly 550% gain. For investors who bought in April 2019, it’s roughly 800%, Bloomberg reported.
