Bitcoin Sinks as US Capital Gains Tax Proposal Injects Fear Into Crypto Market

Bitcoin is pushing lower as tax-related fears weigh on the cryptocurrency, with BTC on track to record its worst week since early February. The move lower was sparked by reports that President Joe Biden is set to announce a raise on the capital gains tax rate for wealthy investors. Given BTC/USDs massive rise through recent years, traders are likely anxious to sell now and secure their profits at the current capital gains rate.

The high-flying assets decline was joined with a drop on Wall Street Thursday – likely owing to the same catalyst. That said, the price drop may further spill into the broader market and punish overall sentiment. The most susceptible among those assets likely being other high-beta stocks and currencies, especially risk-sensitive ones such as the Australian Dollar and New Zealand Dollars.

Bitcoins psychologically important 50,000 level may be key to near-term price direction. A decisive breach lower would likely open the door for further selling. On the other hand, if bulls manage to defend the level overnight, it may inspire confidence in the longer-term bull narrative and help price recovery. The Relative Strength Index (RSI) is nearly in oversold territory, while MACD continues to weaken.

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