What is the Reason for the Decline in Bitcoin?

Bitcoin, which gained value with Coinbase's listing, began to experience sharp declines. So what is the reason for the decline in Bitcoin?

Economy Desk·April 23, 2021

A bitcoin coin in front of a bitcoin/dollar candlestick chart (illustrative image)

Jorge Franganillo / Wikimedia Commons (cc-by-2.0)

What is the Reason for the Decline in Bitcoin?

Bitcoin, which climbed to $ 65,000 with Coinbase's listing on the Nasdaq last week, began to experience sharp declines.

Bitcoin, which reached $ 65,000 with the listing of Coinbase on the Nastaq, fell sharply to $ 51,000 on Sunday. Today, it has been pulled under 48 thousand dollars. So what is the reason for the decline in Bitcoin? Here are the details ..

Biden's Tax Offer

Experts say the recent decline in the leading cryptocurrency was caused by US President Joe Biden's proposal to raise the tax rate he is considering to take from those who have gained more than $ 1 million in capital gains. Bitcoin, which went in the range of 53-55 thousand dollars after Joe Biden's statements that emerged on Thursday evening, dropped below 48 thousand dollars in the morning hours of Friday and continued this withdrawal. Biden's tax move caused a decline in the US stock markets as well. The S&P 500 and Nasdaq fell 1 percent. US cryptocurrency investors are known to be the most vulnerable group to capital tax, as they have made very serious gains since 2020.

"A Completely Normal and Technical Correction Movement"

On the other hand, according to Ki Young Ju, founder and CEO of the on-chain data analytics company , this is a completely normal and technical correction. Pointing out that the bears need to be a little more patient and implying that they expect a little more decline, Ki Young Ju said: “Premium prices in Korea have calmed down, but the market is still under too much pressure. The bears should be a little more patient. Do not get me wrong. I see this retraction as a technical correction due to excessive pressure in 'long' positions. The foundation is still very strong. After a few more calm weeks, Bitcoin will go up again.”

Frequently asked questions

What recent US policy proposal is linked to Bitcoin's price decline?

The decline is widely attributed to a proposal from US President Joe Biden to significantly increase the capital gains tax rate for high-income earners, which created selling pressure across risk assets, including cryptocurrencies and stocks.

How did the broader financial markets react to the tax proposal news?

Following the news of the proposed tax increase, major US stock indices like the S&P 500 and Nasdaq also fell, indicating a broad market sell-off in response to the potential policy change affecting investment returns.

Why might US cryptocurrency investors be particularly affected by a capital gains tax hike?

US crypto investors are considered highly sensitive to such tax changes because many have realized substantial gains since 2020, making them a key group that would be directly impacted by an increased capital gains tax rate.

Is there another perspective on the cause of Bitcoin's price drop beyond the tax news?

Some analysts view the price movement as a normal and expected technical market correction following a period of significant gains, suggesting multiple factors can contribute to short-term volatility in cryptocurrency prices.