The price of bitcoin dropped below the psychologically important $50,000 level on Friday, as worries over rising U.S. taxes filtered over to cryptocurrencies, adding to recent pressure already simmering on those alternative investments.
last changed hands at $47,659, a slide of 12% over 24 hours and a level not seen since early March, according to Coindesk. Losses were spread across other cryptocurrencies, with ether
on the ethereum network, also droppping around 13% over the same time period, trading at $2,120. XRP
which is pegged to Ripple, has lost 22% in 24 hours, last trading at $1.01.
The fresh losses for bitcoin represent around a 26% drop from a recent peak of $64,829 for the cryptocurrency. A 20% drop meets the widely accepted definition of a correction. Bitcoin saw a sharp slide last weekend, though the cryptocurrency’s volatility mean slides of more than 10% are not unusual. Fears of increased regulation were at the heart of last Sunday’s pullback.
Friday’s losses come on the heels of a more-than 300-point loss for the Dow industrials
after a media report that President Joe Biden is weighing a plan to nearly double capital-gains tax on the wealthy.
“It is clear that Bitcoin is more sensitive to capital gains tax threats than most ‘asset’ classes. The threat of regulation, either directly in developed markets or indirectly via the taxman, has always been crypto’s Achilles’s heel, in my opinion,” said Jeffrey Halley, senior market analyst at Oanda, to clients in a note.
Halley said the next bitcoin level he’s watching out for is $42,000, which “might come this weekend, or next week or perhaps not at all.”
“Hopefully, we will hear as many ‘experts’ saying this is a sign of bitcoin becoming a ‘maturing mainstream asset’ if it falls 10% this weekend, as we do when it rises, or a crypto-exchange chooses to IPO,” he said.
A number of analysts have warned of a near-term downturn for bitcoin as the cryptocurrency has continued to track lower after reaching an all-time peak above $64,000 following the direct listing of cryptocurrency platform Coinbase