More taxes may cause short-term volatility, “but long term, you may see more demand for DeFi applications and other collateralized use cases.”
There are often multiple causes for an asset’s sharp decline, but Bitcoin’s (BTC) 10% “nosedive,” which took place on April 22, may be blamed on the Biden Administration’s reported plan to tax capital gains at double the current rate on America’s wealthiest.
Bitcoin is habitually volatile, so one probably shouldn’t read too much into a double-digit swoon in any given week, but this might be as good a place as any to reflect upon the possible impact of the United States capital gains taxes, and taxes in general, upon the future growth of cryptocurrencies and blockchain technology.
Could it hinder long-term adoption? If so, in what ways? Will the Biden plan even reach fruition, given the vagaries of US politics? How, too, does one explain the mini-market eruption in the face of the mere possibility of more taxes in a single nation? What sorts of misperceptions might we be harboring with regard to crypto taxation generally?
“The price drop can probably be attributed to a number of factors and rumors — chiefly, the month-end expiration of future positions, which resulted in a liquidation of positions that triggered a slide,” Markus Veith, a partner in the audit practice at Grant Thornton LLP and leader of the firm’s digital assets practice, told Cointelegraph.