In briefBitcoin’s price has dropped below $50,000. Some in the crypto industry believe the price drop could be explained by President Biden’s proposed capital gains tax hike.
Bitcoin’s price has dropped to $48,000. This is the first time the cryptocurrency has fallen below $50,000 since March 7, 2021.
According to CoinGecko, Bitcoin has fallen by almost 10% in the last 24 hours, and by 23% in the last seven days.
Other coins fared even worse. XRP slipped 17.6% in the past day to $1.05 and Uniswap fell 14.3% to $31.85.
“There is a lot of new capital that has entered the market, some investors are still on edge and unverified negative news can cause a lot of short-term damage. That is what we are seeing,” Charles Storry, head of growth at DeFi index provider Phuture, told Decrypt.
Today’s price drop sees Bitcoin drop approximately 33% from its current all-time high in price of $64,445, achieved on April 14, according to CoinGecko.
One of the reasons why Bitcoin’s price may have seen a downturn is growing fears surrounding a capital gains tax hike in the US. Under US tax law, selling cryptocurrency triggers a “taxable event,” and US taxpayers must pay tax on any profits or losses; the taxes, higher for short term holders, affect day traders more.
However, although the crash wiped a cool $170 million from the crypto market cap (according to CoinGecko), some think that Biden’s tax proposals could actually benefit Bitcoin in the long run. “President Biden could be doing crypto—and especially crypto lending businesses like ours—a favor,” said Antoni Trenchev, co-founder and managing partner of Nexo, a digital assets firm with over $12 billion in assets under management.
Trenchev added that the best choice for Bitcoiners looking to manage their finances would be to borrow against things you own or things you plan to buy and avoid capital gains taxes. “What better collateral than one that—despite today’s price dip, likely caused by the said proposal—appreciates in value like Bitcoin?” he added.