Bitcoin crisis: Value sinks below $50,000 as Joe Biden tax plan sparks panic
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The selloff came after reports that the Biden administration was planning proposed changes to the US tax code. This could include a plan to nearly double taxes on capital gains to 39.6 percent for people earning more than $1 million.
Bitcoin slumped 7 percent to $48,176, falling below the $50,000 mark for the first time since early-March, while smaller rivals Ether and XRP fell around 10 percent.
The tax plans also hit markets, prompting investors to book profits in stocks and other risk assets, which have rallied massively on hopes of a solid economic recovery.
Levies on investment gains were said to be in line for record increases.
Bitcoin is on track for a 15 percent loss on the week, though it is still up 65 percent since the start of the year.
Ether also dropped more than 10 percent to as low as $2,107, a day after climbing to a record $2,645.97.
Chris Weston, head of research at Pepperstone Markets Ltd, a foreign exchange broker based in Melbourne, explained why the tax plan may be affecting the value.
He said: “That’s what everyone is talking about now.
“And I think you may have some technical selling going through. Ether’s been the poster child of movement.
“It has massively outperformed Bitcoin.”
Meanwhile, shares of cryptocurrency exchange Coinbase also fell 5 percent to $278 in US pre-market trading.
This marked the lowest level since its listing earlier this month.
The listing had driven bitcoin prices to $65,000, before pulling back 25 percent in the following days.
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Neil Wilson, chief market analyst at Markets.com said: “The Coinbase listing the ultimate poacher-turned-gamekeeper moment – might have been the high watermark for Bitcoin.”
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