Topline
Bitcoin—the world’s most popular cryptocurrency—struggled to recover its losses on Friday after plunging below the $50,000 price level in the early hours of the morning thanks to investor jitters over President Biden’s plan to nearly double capital gains taxes for the wealthy.
Key Facts
A wave of selling that started early Friday morning pushed bitcoin’s price as low as about $47,814, according to crypto-data website CoinMarketCap, and wiped $97 billion off bitcoin’s market capitalization.
As of 7:48 a.m. ET, bitcoin had recovered some of those losses and climbed to $49,771 per coin, with market cap losses of about $93 billion.
Other popular cryptocurrencies followed suit on Friday, with ether paring 12% losses overnight down to about 8% by 8:00 a.m. ET and Ripple’s XRP paring 18% losses back to about 11%.
Crucial Quote
Despite the initial shock to the market following the news that President Biden will propose hiking capital gains taxes to 39.6% for individuals earning more than $1 million (which also set equity markets falling), one expert is confident that crypto will rebound quickly. “While the shock may be sustained in stock markets, the nature of cryptocurrency will see straight through this dip,” Oliver von Landsberg-Sadie, CEO of crypto payments company BCB Group, told CoinDesk. That’s because of the influx of “large-scale crypto buyers who simply have no intent on exiting the position,” he said.
Key Background
Friday’s losses are the latest in a series of volatile price swings for bitcoin, which reached a record high of almost $65,000 ahead of crypto exchange Coinbase’s public listing last week but fell more than 10% last weekend—shrinking the total crypto market by $300 billion—as blackouts in China slashed mining rates.
Surprising Fact
When bitcoin’s price fell below its 50-day moving average last Tuesday, it ended the cryptocurrency’s longest streak of consecutive closes above that average since at least 2014, according to analysts at Bespoke Investment Group.
Further Reading
Bitcoin’s Drop From Biden’s Proposed Tax Hikes Not Likely to Last, BCB CEO Says (CoinDesk)
