The crypto market has to cope with severe losses today. What is behind the massive sell-off – and how far can the correction go?
The crypto market is showing its most volatile side today: Bitcoin (BTC) and almost all altcoins are deep in the red.
The sale has for the time being wiped out the slight signs of recovery that the Bitcoin price showed after the shock last weekend.
A look beyond the crypto box also reveals a dent in investor sentiment – especially among US investors. The Dow Jones closed yesterday’s trading day – despite good news regarding the unemployment figures – with a minus of almost 1 percent. The same goes for the S&P 500.
Biden government plans to double capital gains tax
The suspicion arises that the current corrections in the crypto and US stock markets have a common root: tax concerns. As the news portal Bloomberg on April 22 reported, the US government around President Joe Biden is considering an increase in capital gains tax for the wealthy to up to 43.4 percent. That would correspond to almost a doubling. So far, in the US, short-term capital gains are taxed as normal income at rates of up to 37 percent; long-term profits are taxed overseas at lower rates of up to 20 percent. In yesterday’s White House press conference, government spokeswoman Jen Psaki confirmed that a tax hike was planned. The details are currently being worked out. The Biden government wants to put the hoped-for additional income into an infrastructure program and childcare, among other things. (Also Read: Binance Coin (BNB) Arbitrage, Price Prediction and Technical Analysis Prediction 2021-2022)
Bitcoin transfers to exchanges: highest level since the corona crash
In addition to the announced tax increase, more than a year has passed since the Corona crash. Anyone who has used the dip and has held their Bitcoin since then pays the reduced tax rate for long-term investments on their investment income. It is obvious that many investors have now got their flocks out of the way.
Data from the blockchain analysis company Glassnode show : The stream of Bitcoin units flowing on exchanges has reached the highest level since the Corona Crash.
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How far does the correction go?
Even if there is a plausible explanation for the recent profit-taking, an expansion of the correction in the crypto market cannot be ruled out for the time being. As Stefan Lübeck explains in our current Bitcoin price analysis, sales in the worst-case scenario could push BTC down to the level of 43,000 US dollars in the medium term. The fact that BTC broke the support area between $ 51,307 and $ 50,327 makes this scenario more likely. But the cops shouldn’t give up quite so quickly. At the current Bitcoin rate , the next supports are at $ 47,070, $ 44,878, $ 43,030, $ 41,967, $ 40,240, $ 39,130, $ 37,910, $ 36,904.