After showing a record momentum, the downward spiral in Bitcoin prices has begun, with the largest cryptocurrency by market capitalization falling below the $50,000 mark. In the last 24 hours, the prices of Bitcoin have fallen by around $4300, and with this, the cryptocurrency registered a loss for the seventh time in the last eight days of its trading.
It’s also important to note that since 2018, it is for the first time that a market capitalization of Bitcoin has fallen below 50% of the total market cap of the crypto sphere. Many reasons have been speculated behind the decline of Bitcoin, although the most plausible explanation given by experts is the listing of Coinbase on NASDAQ. Post the listing of Coinbase, Bitcoin failed to keep its price momentum and subsequently lost its value thanks to the hype created by Coinbase and its potential implication for the price of Bitcoin.
The public’s growing interest in Bitcoin and other cryptocurrencies has also led Central Banks to press the panic button on regulations related to digital coins. There are more stringent regulations in the offing which means that the anonymity and unregulated characteristics of Bitcoin and other cryptocurrencies will vanish away soon in the future.
Another important reason that can be attached to the decline in Bitcoin prices is the speculated tax proposal of the US government. According to the news, Joe Biden’s administration has proposed to double the capital gain tax; the investors who are holding the cryptocurrency for more than a year have to pay a heavy amount in terms of capital gain tax. This speculation has led to the selling of Bitcoin and became one of the reasons behind its decline in recent times.
Analysts at JPMorgan have also warned that if Bitcoin prices do not regain and reach above its resistance level of $60,000, it would be challenging for the cryptocurrency to maintain its current price point according to bitcoin projections. The institutionalization of Bitcoin in terms of many well-known organizations announcing the support for the cryptocurrency was one of the main reasons behind its price escalation. However, now the growing scrutiny and stands of the governments and Central banks to come forth with regulations for the cryptocurrencies have halted the ascent of Bitcoin. The effect is visible on other cryptocurrencies too, as most of the cryptocurrencies having a dominant position in the CoinDesk 20 lost their values, with significant names like Ethereum and XRP witnessing a decline in their fortunes.