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Crypto markets pulled back sharply after reports US president Joe Biden is planning to raise capital gains tax for the wealthy.
Bloomberg reported on Thursday that Biden is considering nearly doubling tax to as high as 39.6%, an increase from the current 20%. Cryptocurrency investors face higher taxes if Biden presses ahead.
Dogecoin's (DOGE) price continues its downward spiral after a few days of gains, slumping as much as 28%, it is currently trading 26% lower. XRP plummeted 20%.
Meanwhile, Coinbase (COIN) struggled to stage a rebound in New York overnight, pushing 6% lower for the fourth consecutive day.
The sell-off comes after the Deutsche Boerse (DB1.DE) said that it would delist the crypto exchange platform from the Xetra trading system and the Frankfurt Stock Exchange due to an error identified in the reference code.
While the Boerse has since backtracked on the decision, keeping Coinbase listed, it failed to trigger a recovery in its stock price.
"The Biden administration is looking to raise the top marginal income tax rate to 39.6% from 37%, whilst also doubling capital gains tax to 39.6% for people earning more than $1m. Tax the rich, hand it out to the poor. Sounds like furlough, but on a permanent basis," Neil Wilson, chief markets analyst at Markets.com said.
Last weekend, Bitcoin experienced a similar massive sell-off, shedding almost 15% in 24 hours — the biggest intraday drop since February.
The drop appeared to coincide with reports that the US Treasury is planning to tackle financial institutions for money laundering carried out through digital assets.
Data website CoinMarketCap cited a blackout in China’s Xinjiang region for the fall, which allegedly powers much of Bitcoin mining — the process by which new bitcoins are entered into circulation.
On Sunday, the flagship crypto shed nearly $8,000 and was trading 12% lower at $54,900, down from a day high of $61,293.
Bitcoin's flash crash saw a new record in liquidations, resulting in more than one million positions being wiped off the books. This meant that $10bn in positions were liquidated, according to Bybt.
It comes after bitcoin approached $65,000 ahead of the debut listing of cryptocurrency trading platform Coinbase on last week. Coinbase is the first crypto firm to list on the Nasdaq (^IXIC).
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