Will The Biden Tax Plan Punish Bitcoin Hodlers?

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Last Updated on 24 April 2021 by CryptoTips.eu

Jeroen Kok

Jeroen is one of the lead copywriters on Cryptotips.eu and discusses all recent events in the crypto market. This includes news updates, but also price analyzes and more. He developed his passion for cryptocurrency during the bull run in 2017. He has learned a lot since then. The combination of cryptocurrency and creative writing is perfect for Jeroen and an excellent way to share his knowledge with a wide audience. Find me on LinkedIn / jeroen@cryptotips.eu
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The Bitcoin pullback (which some call a dump) have been announced over and over again on many sites for weeks on end. The more interesting piece of news therefore was the reason that people were name for starting the whole thing, a proposed tax raising plan by the Biden administration that is yet to be drafted.

This site made a mention of that plan this week when it admitted that Cardano founder Charles Hoskinson warned investors possible crypto regulation was looming and that it would be part of a new taxation package that the White House would put forward.

But many crypto analysts are not convinced though.

Technical analyst Scott Melker, who tweets under the moniker Wolf of All Streets, responded to the news, stating:

Imagine believing that people are selling Bitcoin because of a proposed theoretical tax plan that has to pass the House and Senate and would not even go into effect this year. And if you are actually selling for that reason, be gone demon.

Advertentie.

Capital gains tax

It was Bloomberg that admitted earlier this week that the Biden administration was indeed considering raising the tax on capital gains to 39.6% for those earning more than $1 million a year, a move that would hit traders hard.

Under the plan, investors who held Bitcoin for more than a year would be faced with a capital gains tax if they sell the cryptocurrency. Given that Bitcoin has risen more than 70% already in 2021 this would still leave them with a pretty penny, but it looked like many wanted to not take the risk altogether and exited the market.

Market analyst Matt Maley said to Yahoo Finance that:

One of the biggest things you have to worry about is that the things with the biggest gains are going to be most susceptible to selling.

It doesn’t mean people will dump wholesale, dump 100% of their positions, but you have some people who have huge money in this and, therefore, a big jump in the capital gains tax, they’ll be leaving a lot of money on the table.

Peter Brandt, the legendary commodity traders, admitted that he expected Bitcoin to fall even further in the coming days and weeks, and stated he had put in a whole bunch of buy orders around the $32k level. Let’s wait and see we think.