Bitcoin’s price climbed by 10% and surged to $54,965 today, the highest it has been since reaching a low of $46,850 on Sunday.
But it isn’t just BTC that experienced massive gains at the start of the week as both XRP and Ether, two of the top altcoins, also rose by 15% and 9%, respectively.
Bitcoin went under the significant $50,000 barrier for the first time since early March and toppled to just $47,273 after US President Joe Biden announced new tax reforms.
The newly-elect POTUS confirmed that new tax laws are underway, which can heavily impact the profitability of digital coin holders and investors. The crypto community immediately reacted negatively to this, selling off $260 billion in a single day.
According to reports, Biden will increase long-term capital gains taxes of the upper class to 43.4% while also adding a new surtax.
Stocks took the brunt of investor concerns but permeated the crypto market as well, despite no specific mention of cryptos in the proposed tax plan yet.
Bitcoin’s price increased by 80% since the year started as more large-scale companies and institutional investors such as Tesla and Visa announced new plans that involve the use of cryptos.
Take for example Musk’s statement which said Bitcoin can be used as payment when buying Tesla cars. Visa also confirmed that they now accept USDC crypto for payments. Unfortunately, these developments in the industry weren’t enough to maintain BTC’s strong standing.
One of the biggest factors that affected Bitcoin’s price slump was the potential clampdown of cryptocurrencies by regulators. European Central Bank President Christine Lagarde and US Treasury Secretary Janet Yellen also said that Bitcoin is still widely used as a mode of payment for illegal activities.
The Central Bank of the Republic of Turkey even banned digital assets as a mode of payment after two crypto exchanges collapsed. To make matters worse, Thodex, who is the CEO of one of the firms, fled Turkey and brought with him over $2 billion worth of investors’ funds.
But looking at the bright side, there are still a lot of signs that crypto is on the right path as it’s slowly entering mainstream.
A good example of this is when Coinbase finally went public after being listed in Nasdaq. PayPal also launched new crypto trading features and allowed users to use digital coins when shopping.
Furthermore, Fairlead Strategy Founder Katie Stockton believes Bitcoin’s previous incident was just a short-term loss in momentum.
Stockton said, along with many crypto analysts, that the prices of digital coins would further increase because of their previous price movements and growing adoption rate.