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Bitcoin nosedives 7% amid plans to double capital gains tax in US

Bitcoin prices have been in a corrective phase after experts hinted at a possibility of a bubble following its epic rise that saw the cryptocurrency scaling $64,000 a week ago.

April 23, 2021 / 04:19 PM IST

Bitcoin took a beating on April 23 after US President Joe Biden was said to propose almost doubling the capital gains tax for the wealthy.

At the time of writing this copy, the cryptocurrency was trading down 6.89 percent at $49,964.06. It touched a 24-hour high of $55,471.08 and a 24-hour low of $48,655.69. Year to date, bitcoin is up more than 73 percent.

Biden will roll out a plan to raise taxes on the wealthiest Americans, including the largest-ever increase in levies on investment gains, to fund about $1 trillion in childcare, universal pre-kindergarten education and paid leave for workers, sources familiar with the proposal said.

The plan is part of the White House's push for a sweeping overhaul of the US tax system to make rich people and big companies pay more and help foot the bill for Biden's ambitious economic agenda.

The proposal calls for increasing the top marginal income tax rate to 39.6 percent from 37 percent, the sources said. It would also nearly double taxes on capital gains to 39.6 percent for people earning more than $1 million.

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That would be the highest tax rate on investment gains, which are mostly paid by the wealthiest Americans, since the 1920s. The rate has not exceeded 33.8 percent in the post-World War Two era.

Also Read: Joe Biden to propose almost doubling capital gains tax rate for wealthy individuals

Prior to the announcement, bitcoin prices were already in a corrective phase after experts hinted at a possibility of a bubble following a huge rise that saw the cryptocurrency scaling $64,000 just a week prior.

A recent survey conducted by the Bank of America Fund Manager showed that about three out of four professional investors think that bitcoin is in a bubble. The fund managers who participated in the survey also rated bitcoin second on the list of the most crowded trades. Recently, investment bank JPMorgan had also warned that cryptocurrency as a sector is in a bubble.

In India, a proposed law is likely to ban digital currencies may include provisions to provide an exit window of three-six months to existing crypto holders of private entities, The Indian Express has reported.

"An option to provide an exit period to three-six months prior to banning the trading, mining and issuing of cryptos has been discussed in inter-ministerial discussions. A final draft of the bill is yet to be taken to the Cabinet," the daily reported, quoting sources. The proposed law will also require investors to disclose details of holdings and transactions done in the past, the official added.

According to unofficial estimates, Indians hold around $1.5 billion or Rs 10,000 crore worth of crypto assets.
Moneycontrol News
first published: Apr 23, 2021 09:23 am

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