Bitcoin and other digital coins plunged yesterday, wiping over $200 billion of the value of the cryptocurrency market.
This development came as a proposed capital gains tax hike from U.S. President Joe Biden led to a wave of selling.
At around 10 a.m. London time yesterday, bitcoin was down over 8%, at $48,687, according to Coin Metrics data. It’s the first time bitcoin has traded below $50,000 since early March.
This wiped out more than $200 billion of value from the entire cryptocurrency market, according to data from CoinMarketCap. It also triggered a sell-off in stock markets overnight, with all three major U.S. indexes ending Thursday’s session in the red.
Analysts said fears over Biden’s capital gains tax proposal may be extending to crypto investors, who have had a great year with the price of bitcoin having climbed more than sixfold in the last 12 months.
In 2021 alone, bitcoin has risen 66% while ether — the digital token of the Ethereum blockchain — has rallied over 200%.
Part of that support has been because of increased buying of bitcoin by institutional investors. Recall that companies such as Tesla and Square have bought billions of dollars worth of bitcoin too.
Banks are also trying to allow their clients to get involved in the bitcoin market. In March, Morgan Stanley said it was launching access to three funds that enable ownership of bitcoin, CNBC reported.
However, concerns over a regulatory crackdown on bitcoin continue to cloud the market. Many industry observers have warned governments could clamp down on the use of bitcoin and other cryptocurrencies.
India is planning to introduce a law to ban the trading or even ownership of cryptocurrencies, Reuters reported last month.
Authorities around the world are looking into how to regulate bitcoin.