Biden’s tax plans are sending cryptocurrencies downhill

The planned increase in capital gains taxes in the United States is primarily affecting the rates of digital currencies. But that doesn’t seem to be the only reason. The price reactions are different on the stock exchanges.

Bitcoin digital currency

Dhe planned increase in capital gains taxes in the United States is weighing on cryptocurrencies. The price of Bitcoin temporarily fell a good 6 percent on Friday to a seven-week low of $ 48,357. For the first time since March 8, it also went below the $ 50,000 mark. The number two among the digital currencies, Ethereum, lost a good 12 percent to 2115 dollars. On Thursday it had reached a record high of $ 2,645.75.

According to market rumors, American President Joe Biden intends to roughly double capital gains taxes. Stockbrokers fear that this will reduce the attractiveness of cryptocurrencies as an investment. Some funds had responded to the news with aggressive sales, said Avi Felman, chief trader at cryptocurrency specialist Blocktower.

Profit-taking is conceivable

Especially with Ethereum, the price losses are to a not inconsiderable extent a reaction to previous price gains, said Chris Weston, chief analyst at the brokerage house Pepperstone. The development was significantly above average compared to Bitcoin. Since the beginning of the year, Ethereum has grown almost 230 percent, almost four times as much as Bitcoin. In the same period, the MSCI World Share Index only rose by just under 5 percent.

The stock exchanges reacted in part with losses to the possible impending tax hike in the United States. On Wall Street, the Dow Jones standard value index last fell 0.9 percent on Thursday to 33816 points. With the slight gains, the Asian stock markets outside of Japan shook off the weak performance of the American stock exchanges. The Dax lost 0.3 percent to 15,273 points in early trading on Friday.