Bitcoin Rebounds 8% After Correction Sparked By Biden Tax Plan

Today has seen Bitcoin's price recover somewhat, after reports of President Biden’s tax plan sent the cryptocurrency below $50,000 last week.

By Scott Chipolina

In brief

• Bitcoin's price fell sharply last week, with many pointing to reports of a capital gains tax hike in the US as the reason behind the drop.
• Today, Bitcoin has largely recovered, hovering just under $54,000.

Bitcoin has rebounded to a price of approximately $53,600, following a price plunge last week that saw it drop below $50,000 for the first time since March 7. 

Per CoinGecko, Bitcoin’s current price is $53,682. This means the flagship cryptocurrency has crept back up by almost 8% during the last 24 hours. At its daily peak today, Bitcoin hit a price of $53,977. 

However, over the last seven days, Bitcoin is still down 6.5%. 

The drop below the psychologically important $50,000 bracket followed reports of a planned hike in capital gains tax that would impact crypto holders. Per President Biden’s proposal, long-term capital gains—those accrued by selling assets held for more than one year—would be taxable for those earning over $1 million in annual income. 

The news prompted a dip in Bitcoin’s price that, according to Curtis Ting, managing director of Europe at crypto exchange Kraken, is far from uncommon. “This won’t be the first time the market has given a knee-jerk response to real-world events, and it certainly won’t be the last,” he told Decrypt at the time. Earlier this year, for example, Bitcoin fell by over $10,000 in a single day, but that was broadly considered to be one of Bitcoin’s many typical price corrections. 

The fact that Bitcoin has previously suffered from mini-price crashes—as we saw last week—prompted others in the crypto industry to downplay the impact of Biden’s tax proposals on Bitcoin’s price. 

During the 2017 bull run, Bitcoin experienced five price corrections of over 30%, despite the fact the cryptocurrency’s bull run culminated in a then all-time high of just under $20,000. 

Whether Bitcoin’s recent price drop was a typical correction or a jittery reaction to a rumored tax hike in the United States, it appears as though the cryptocurrency is now on the way to recovery. 

Having said that, when reports of Biden’s tax proposal first started circulating on April 22, Bitcoin’s price was around $55,000—so it still has some ground to make up yet.