Bitcoin’s price fell below $ 50,000 (£ 36,000) per bitcoin, its lowest level since early March. Wall Street stocks, stakes in tech companies, and digital assets like Bitcoin all pulled back after reports of new White House laws were released on Thursday night. The S&P 500 market closed 0.9 percent lower while the FTSE 100 and European markets all traded lower on Friday morning. Bitcoin hit a record high on April 14, when the value of the cryptocurrency hit $ 64,895 (£ 44,754) on the same day. Coinbase, the largest crypto exchange platform in the United States, was launched on the Tech Street-loaded Nasdaq exchange on Wall Street.
Why is Bitcoin crashing?
Bitcoin crashed after it was revealed that US President Joe Biden plans to raise taxes for the richest US citizens.
The law tries to fight inequality and finance higher social spending.
The White House has put the finishing touches to capital gains tax for wealthy individuals, forcing Bitcoin to decline amid uncertainty.
If this goes through, capital gains tax would double the tax rate rich people pay on investment returns when they sell stocks and other assets – including bitcoin.
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According to President Biden’s proposal, the tax rate on federal capital gains would be up to 43.4 percent, according to a Bloomberg report.
Investors currently pay an interest rate of 23.8 percent for long-term capital gains.
Bitcoin was cut by as much as 10 percent this week due to the tax proposal that sparked fears about future digital asset investments.
However, equity market investors are more skeptical about the chances of tax changes brought about by Congress with Mr. Biden.
London investors accepted the collapse of Wall Street when the FTSE 100 index fell just 10.20 points to 6,929.40.
Bitcoin’s recent surge is due to the fact that the US Federal Reserve and government assistance programs helped boost financial markets during the pandemic.
Analysts have said the higher interest rates could lead rich people to sell stocks to hedge current interest rates.
Private equity investors and hedge funds would also undoubtedly be affected.
Other major cryptocurrencies have also suffered heavy losses in the past few days. According to CoinMarketCap, more than half a trillion dollars have been removed directly from the market.
The magnitude of Bitcoin’s recent crash, which has the greatest financial value but not the percentage, has led to comparisons with the 2017 and 2018 crypto market crashes.
However, Paolo Ardoino, Chief Technology Officer at Cryptocurrency Exchange Bitfinex, said, “Any comparison with the 2018 crypto winter belies the amazing growth of the digital token ecosystem.
“The quantum technological leap that has taken place – both in terms of market structure and advances in various protocols – may be qualitatively different today. We will see.”