Bitcoin and other cryptocurrencies fell on Friday as the proposed increase in capital gains tax from US President Biden triggered a selloff.
Bitcoin fell 7.3 percent to $ 49,730, according to For data Coin Metrics.
It marked the first time that Bitcoin was trading for less than $ 50,000 since early March.
Ethereum fell by 8 percent to $ 2,320, and XRP, the fifth-largest cryptocurrency, fell by 16 percent.
The drop caused more than $ 200 billion to be deleted from the entire cryptocurrency market’s value, according to For data From CoinMarketCap.
President Biden is expected to raise the long-term capital gains tax for the richest Americans to 43.4 percent.
And that would be higher than the highest federal tax rate on wage income.
The new tax rate applies to returns on assets held in taxable accounts sold after more than a year.
This led to a heavy sell-off in the stock markets, as all three of the major US indices ended Thursday’s session with losses.
Analysts said: Concerns about Biden’s proposal could extend to cryptocurrency investors, who have spent an important year with Bitcoin’s price rising more than 6-fold in the past 12 months.
Bitcoin rose in 2021 alone by 66 percent, while Ethereum rose by more than 200 percent, partly due to increased purchases of Bitcoin from institutional investors.
Companies like Tesla and Square have also bought Bitcoin worth billions of dollars.
Banks are also trying to allow their customers to participate in the Bitcoin market, and Morgan Stanley said in March that he had begun accessing three funds that would enable ownership of Bitcoin.
The more money entering the market, the analysts said, the less volatility and the more entrenched things get. For investors, the strategy is always to not put everything in one basket and diversify your assets.
Concerns about the regulatory crackdown against Bitcoin continue to cast a shadow over the market, and authorities around the world are looking into how to regulate digital currencies.
Reuters reported last month that India was planning to introduce a law to ban trading or even ownership of cryptocurrencies.
In February, the US Treasury Secretary described Bitcoin as a highly speculative asset, and said she was concerned about potential losses for investors.
Last week, the deputy governor of the People’s Bank of China described Bitcoin as an investment alternative, marking a noticeable change towards cryptocurrencies after the country’s fierce crackdown on the industry in 2017 and 2018.