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Bitcoin and Altcoins Plunge in Fresh Market Sell-Off; Here Is the Reason for the Sharp Drop & What Analysts Are Saying

Bitcoin

Bitcoin price plunges for the second time in the week, while the crypto market is still nursing the wounds inflicted from Sunday’s bloodbath.

Bitcoin’s sharp drop today also pulled the entire cryptocurrency market downhill with nearly all the Altcoins in red. Major Altcoins especially in the top 100 were severely affected with XRP (-12.10%), Dogecoin (-13.54%), Litecoin (-15.08%), Tron (-15.48%) posting double-digit losses.

The likely reason for today’s fall alluded to U.S. President Joe Biden’s proposed tax hike for capital gains on those earning above $1 million. Biden’s intended treatment of gains in equities as income proposes a tax rate of up to 39.6% instead of the current 23.8%. A Bloomberg report indicates that the federal capital gains tax rate may be as high as 43.40%, which is nearly a 100% increase from the current rate at 23.80%.

This news sent shock waves across the financial and cryptocurrency markets alike. Although the proposal is yet to be announced in the upcoming week, investors have already entered panic-selling frenzy mode. While the stock markets were slightly affected, the crypto market was severely affected with Bitcoin plunging severely to lows of $47,500 before a slight recovery.

BTC/ISD Daily Chart

At the time of writing, Bitcoin was trading at $49,674, down by 8.40% in the last 24 hours. Ethereum was also down by 8.06% to trade at $2,267.

What Analysts Are Saying

Bitcoin price has seen two crashes in less than a week, causing fear to permeate the market space. However, some analysts are maintaining that there is no cause for alarm. Analyst, Dan Held stated ‘Bitcoin has been through far worse. We’re still in a bull run. HOD L Raised fist’.

Twitter analyst, Bitcoin archive stated that the Bitcoin bull market in 2017 had at least 6 corrections of 30-40% which was followed by an average gain of 153%. Cryptotrader and analyst Rektcapital maintains that although Bitcoin is currently in a bull market that doesn’t mean the price won’t pull back to lower levels, stating that ”corrections are a natural, healthy part in any growth cycle”.

The Analyst Listed 5 Facts Over Bitcoin’s Correction:
First, the uptrend is longer than corrections. Second, corrections are normal. Third, every quarter sees at least one strong Bitcoin correction. Fourth, corrections tend to occur at the end of a quarter while some occurred at the beginning of the quarter, and then lastly corrections tend to be -30% to -40% deep.

The sentiment however remains mixed ahead of warnings by analysts at JPMorgan on a sustained bearish action should BTC fail to reclaim the $60,000 level.

Ki-Young Ju, CryptoQuant CEO stated,

“In the short-term, we might have a correction and going sideways in a broad range since the market is over-heated among retail investors.”

Image Credit: Shutterstock

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