The market was primarily shaken by US President Joe Biden’s plan to raise capital gains taxes, but massive losses were exacerbated by the way cryptocurrency investors often trade. Namely, with borrowed money.
“Trading platforms normally lend dollars against a cryptocurrency deposit. Loan values have reached historically high levels, so investors will have to close these positions by forcing the sale of cryptocurrencies held in the event of a further slump,” says Consequ portfolio manager Jiří Procházka. has reached a critical level, investors can start selling cryptocurrencies almost without thinking.
The most painful moment was experienced by cryptocurrency speculators at the end of the week, when the market lost $ 260 billion in just 24 hours. At the time of the highest losses, the cryptocurrency world depreciated up to half a trillion dollars. However, despite huge monetary losses, according to analysts, this is not a collapse in percentage terms. “The current correction, technically speaking, does not go beyond the trend correction so far,” says Jan Lamser of the Fintech company Red Eggs. Similar declines are usual for extremely growing assets.
–
–
“Bitcoin and other cryptocurrencies have seen huge price increases over the last six months, and such increases are always accompanied by higher volatility and sharp corrections,” recalls Pavel Ryska, an analyst at J&T Bank. He stresses, however, that Biden’s plan to nearly double the capital gains tax on more earning Americans could drive some speculators out of the market.
“If the new tax rate applies from next year, many US investors may want to make a profit on cryptocurrencies later this year and pay the current 20 percent tax. Given the multiple price increases for cryptocurrencies over the past year, a tax increase could mean large dollar sums for many investors. , “adds Ryska.
However, the cryptocurrency market was able to bounce back from its local lows. In a single trading day, the value of the global cryptocurrency market increased by about $ 150 billion, or less than nine percent. “At the moment, there is no indication that this should be more than just a short-term decline. Of course, this is especially true in this sense for bitcoin and other” large “cryptocurrencies,” says Michal Stránský, auditor and partner of the consulting company PwC.
According to the coinmarketcap portal, the current value of the cryptocurrency market is around 1.87 trillion US dollars, while a week ago the so-called market capitalization of coins attacked the value of 2.28 trillion. It reached its low at around $ 1.74 trillion at the end of the week.
– .
