The fall of bitcoin and some other digital currencies on April 23 trading day “blew” more than $ 200 billion in the crypto market, according to CoinMarketCap data.
|Bitcoin digital currency. Photo: AFP / VNA|
As of mid-day trading on April 23 (North East American Time), bitcoin has “evaporated” 7.3% to $ 49,730, according to Coin Metrics data. This is the first time bitcoin has been trading below $ 50,000 since the beginning of March. Meanwhile, ether also slipped 8% to $ 2,320, while XRP (Ripple) – the world’s 5th most valuable digital currency. – down to 16%. The simultaneous devaluation of digital currencies made this market “skyrocket” by $ 200 billion, according to CoinMarketCap data.
The wave of digital currency drafts increased after US President Joe Biden proposed to increase taxes on capital gains (CGT) from 20% to 39.6% on profits over $ 1 million. According to CNBC, President Biden plans to increase the long-term CGT tax for the wealthy American to 43.4%, including surcharges. This tax rate will exceed the federal tax rate imposed on wages earned. The new tax rate applies to profits from assets in taxable accounts sold after more than 1 year.
The move of the Biden administration also led to a wave of stock sell-offs on Wall Street, with all three main indexes closing “fiery”. The Dow Jones industrial average “evaporated” 321.41 points to 33,815.90, while the S&P 500 fell 0.92% to 4,134.98 points. The index favored Nasdaq Composite technology to lose 0.94% to 13,818.41 points.
Analysts say President Biden’s proposed CGT tax increase will also have a big impact on crypto investors, who have already benefited greatly from the 6-fold increase in the price of bitcoin in the past 12 months.
Mr. Vijay Ayyar, Head of Business Development of Luno Crypto Exchange said: “The market has increased quite a lot and may cool down before the next developments”.
Year-to-date alone, bitcoin has increased in price by 66% while ether has increased by more than 200%. The impetus for the skyrocketing prices of these digital currencies is the increase in buying by institutional investors. Big corporations like Tesla and Square have spent billions of dollars buying bitcoin.
Meanwhile, investment banks are also moving to encourage customers to participate in the bitcoin market. Morgan Stanley said last month that it had allowed three hedge funds to own bitcoin.
“Things are more established each day, the more money goes into the money market, the less volatility will be,” said Eric Demuth, CEO and co-founder of Bitpanda Digital Assets. “.
“For the retail investor entering the market, the strategy has always been to never put everything in one basket and put only a very small portion of your portfolio in crypto, in bitcoin. Whether you are a strong believer or not, it’s important to diversify your assets, ”advises Eric Demuth.
However, concerns about a legal “crackdown” on bitcoin continue to cloud the market. Governments could impose restrictions on the use of bitcoin and other cryptocurrencies, according to Jesse Powell, CEO of crypto exchange Kraken.
Reuters reported in March that India is planning to enact laws to ban trading or even ban possession of cryptocurrencies. Earlier in February, US Treasury Secretary Janet Yellen called bitcoin “highly speculative assets” and expressed concern about investors’ potential losses.
Many other countries are also looking at how bitcoin is regulated. In a positive move, the deputy governor of the Central Bank of China last week said bitcoin is “an alternative to investment”, marking a more progressive stance on cryptocurrencies following fierce gender reactions. Chinese authorities for this coin in 2017 and 2018.