It’s been a bad couple of days for Bitcoin. First, Turkey banned cryptocurrency trading last week, causing the price of BTC to sink from its highest-ever value of $64,486 to under $60,000. Although Bitcoin’s fall did slow down in the following days, the bearish trend continued.
It kept falling down throughout the week, even though everyone seemed to believe it’s going to stabilize somewhere around $52,000. But then, the news about Biden’s capital gains tax plan came in on Friday morning. Within a few hours, Bitcoin dropped to as low as $48,500.
The story goes that President Joe Biden is planning to collect funds to ensure paid leave for workers, as well as childcare and universal pre-kindergarten education.
Sounds good, but in order to raise money for all those things, Biden plans to raise taxes on the richest Americans. One of the ways to do it is through the increase in levies on investment gains.
What Does Biden’s Capital Gains Tax Plan Mean for Crypto Traders?
Those who earn more than $1 million will have to pay taxes on capital gains of 39.6% if Biden’s plan comes through.
If it does happen, it’s going to be the very highest tax rate on investment gains in decades. In fact, the tax rates haven’t been that high since the 1920s. In fact, the highest it got in the post-WWII period was 33.8%.
What this means is that “Bitcoin whales” could be in trouble. Those who make a lot of money trading Bitcoin will have to give a large chunk of the profits to the government.
As most of the so-called BTC whales (persons who hold 1,000+ BTCs) are located in the United States, a big sell-off is expected in the near future.
If Biden’s tax plan is really to come true, Bitcoin whales will want to sell as much as they can before the new laws are in motion.
This, however, probably isn’t going to mean the end for the American cryptocurrency community. Instead, it’s very likely that the new tax law is going to make BTC distribution more even.
At the moment, about 40% of all Bitcoins are owned by just a couple of thousand people. That’s likely to change if the new tax laws come into existence, especially with Biden promising not to raise taxes on households earning less than $400,000 per year.
What to Expect from the BTC Price in the Next Few Days?
News about Biden’s Bitcoin tax plans have come in on Friday morning, so we still haven’t seen too many reactions from the main players in the industry (e.g., Elon Musk). Nevertheless, it’s only logical to assume that bitcoin whales will start/continue selling their assets.
At the same time, this could bring a nice opportunity for small and medium crypto investors to start buying. However, that probably isn’t going to prevent the price of BTC from sliding even lower in the next few days.
In fact, it seems that the real question isn’t whether BTC will continue falling but how long will the fall last?