Biden Administration Considers Doubling Capital Gains Tax
Concerns Over Repeated Volatility Amid Psychological Support Breakdown
[Asia Economy Reporter Hyunwoo Lee] As Bitcoin prices plummet, fear is spreading throughout the cryptocurrency market, with the psychological support level of $50,000 even breaking down. This is analyzed to be due to the Biden administration in the U.S. planning a significant increase in capital gains tax, along with various tax and regulatory measures being introduced by financial authorities worldwide, leading to predominantly negative outlooks.
According to cryptocurrency media CoinDesk on the 22nd (local time), Bitcoin started trading at around $55,000 per coin but fell to as low as $48,000 during the day, completely breaking away from the psychological support level of $50,000. Bitcoin is currently hovering around $48,000 to $49,000 per coin, down about 9% compared to the previous day.
On this day, Bitcoin sharply declined as selling pressure surged following news that the Biden administration is considering raising capital gains tax. According to foreign media such as CNBC, the Biden administration plans to raise the capital gains tax for high-income earners making over $1 million from the current 20% to 39.6%. Including existing investment income taxes, the rate could rise up to 43.4%. Bitcoin, classified as subject to capital gains tax along with stock trading, was negatively affected by the tax hike issue.
Additionally, rumors spreading through social networking services (SNS) such as Twitter further fueled the sharp decline. According to Bloomberg News, rumors circulated on SNS that Treasury Secretary Janet Yellen is considering expanding capital gains tax on cryptocurrencies up to 80%, which intensified the fear.
Experts analyze that since Bitcoin’s psychological support level has collapsed, temporary volatility may increase, and it will be difficult for the price to stabilize until it recovers the previous high of $60,000. Pankaj Balani, CEO of cryptocurrency exchange Delta Exchange, explained, "Technically, more downward trends are appearing as Bitcoin’s price falls below the 50-day moving average support line. Although Bitcoin’s price could suddenly rebound, even then, it is likely to be a temporary rebound until it recovers the previous high of $60,000."
After surpassing $64,000 following the listing of Coinbase, the largest U.S. cryptocurrency exchange, on the 14th, Bitcoin turned to a downward trend due to spreading fear from regulatory tightening worldwide and investors’ profit-taking moves. Alongside the sluggish performance of the representative cryptocurrency Bitcoin, Ethereum (-11.22%), Ripple (-22.17%), and even Dogecoin (-27.34%), which had recently shown strength, all cryptocurrencies are experiencing a sharp decline in prices simultaneously.
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