Bitcoin and other cryptocurrencies were trading in the red early Friday, as investors feared that the US government might raise taxes soon.
The White House has proposed increasing capital gains taxes on those making more than $1 million a year from 20% to 39.6%, but market participants are concerned about the reality of higher taxes.
Crypto investors are concerned that higher capital gains taxes would reduce demand for cryptocurrencies such as bitcoin, which has soared in recent months.
According to Coin Metrics, Bitcoin was down 7.3 percent at $49,730. It’s the first time since early March that bitcoin has traded below $50,000.
Ether has dropped by 8% to $2,320. The fifth-largest cryptocurrency, XRP, has dropped by 16 percent.
According to CoinMarketCap estimates, this wiped out more than $200 billion in value from the entire cryptocurrency market.
Bitcoin has gained 66 percent in 2021 alone, while Ethereum has gained over 200 percent.