Bitcoin and other digital currencies dropped down on Friday as a wave of selling triggered by US President Joe Biden’s proposed capital gains tax hike.
According to Coin Metrics data, bitcoin was down 7.3 percent at $49,730 at midday EST. It’s the first time since early March that bitcoin has traded below $50,000. Ether has dropped by 8% to $2,320. The fifth-largest cryptocurrency, XRP, has dropped by 16 percent.
According to Coin Market Cap numbers, this wiped out more than $200 billion in value from the entire cryptocurrency market.
President Biden is set to lift the long-term capital gains tax to 43.4 percent, plus a surtax, for the richest Americans. This is higher than the highest federal tax rate on wage profits. Returns on assets kept in taxable accounts and sold for more than a year will be subject to the new tax rate.
This sparked a sell-off in financial markets overnight, with all three big U.S. indices closing in the red on Thursday. Fears about Biden’s capital gains tax plan could be spreading to crypto investors, who have had a fantastic year with bitcoin’s price that more than six fold in the last year, as per analysts.