TL;DR Breakdown
- Cryptocurrencies plunged on Tuesday, with Bitcoin price sliding towards the $60,000 level and Ether close to its lowest levels of November
- Analysts attribute this broad market dip to new tax-reporting rules stated in the Infrastructure Bill which Joe Biden signed into law on Monday
- Another reason for the huge sell-off is speculated to be China’s statements on mining and the country’s ongoing crypto clampdown
The cryptocurrency market remained in the red on November 16. The global crypto market cap stands at $2.67T, down by 6.98% over the last 24-hours. What’s causing this crypto bloodbath?
Bitcoin price has declined by about 8% and is currently trading at $60,391. Second-ranked Ether also plunged as much as 10%, per Coinmarketcap. While crypto is being considered as a hedge against inflation, crypto traders have encountered a massive selloff in the market today. Analysts deem these possible reasons behind the plunge.
United States Infrastructure Bill contributed to bitcoin price plunge?
After months of negotiations, President Joe Biden signed the $1 trillion infrastructure bill at a White House ceremony on November 15. As previously reported by Cryptopolitan, the crypto community was already not happy with introducing this bipartisan bill. However, now that it has been passed, it has initiated a massive selloff from traders.
The Infrastructure bill includes specific provisions that might create problems for crypto traders. One of such provisions will compel “brokers,” mainly exchanges, to file their cryptocurrency gains in a 1099 type form with the IRS department. “Brokers” will also have to reveal the names and addresses of their customers.
Since the definition of ‘broker’ under IRS rules is too broad, crypto advocates worried it could target miners, hardware developers, and others. However, in response to this concern, the U.S. Treasury Department clarified that it would not target any of these non-brokers. Nonetheless, the bill’s complicated language remains a significant issue for customers who do not have access to complete information.
Under another such speculative provision, businesses and exchanges must file a report with the IRS to receive $10,000 or more in cryptocurrency. Per the law, the filing should include these details about the payer–their name and Social Security number. If the filling doesn’t have the mentioned details, it will be considered a felony offense on the exchange’s end.
House Democrats’ proposed tax-and-spend package would subject digital assets to two anti-abuse rules that already apply to stocks and other securities. The change would restrict crypto investors’ tools to hedge against potential losses and lower their capital gains taxes.
China’s clampdown on cryptocurrencies
Lashing out against crypto is nothing new for the Chinese authorities. However, the country’s war on bitcoin and cryptocurrencies took another sharp angle in 2021 when they turned against miners and blamed them for everything, including energy waste to coal mining accidents. Per the reports, Meng Wei, National Development and Reform Commission (NDRC) spokesperson, said during a press conference that NDRC intends to regulate industrial-scale bitcoin mining and any involvement by state businesses in the activity.
Cryptocurrency has shoved the Bitcoin and crypto miners and exchanges out of the country. A few firms that have moved out of China are–Huobi, Binance, BTC.com, and Bitmain. China’s take on cryptocurrency and mining can also be a huge reason for a selloff in the market.
Analysts noted that Bitcoin price doubled up this year, and Ether soared about six-folds. Vijay Ayyar, head of Asia Pacific with crypto exchange Luno in Singapore, indicated with Bloomberg:
It would be unusual to keep moving up without corrections…we’re seeing a healthy pullback after a prolonged rally.
Vijay Ayyar, VP, Asia Pacific & Global Expansion – Luno
New bitcoin wallets means what?
Despite the current onslaught of declining prices, market experts still hope for a correction in price. An estimated $350 Million has been lost in the present digital currencies crash, and almost all traders are hoping to recover their lost investments since May 2021. However, according to the Glassnode report, a cluster of new wallets had been created, with holders interested in earning profits with their Bitcoin.
What’s causing the downtrend in crypto prices? Please head to Twitter and vote.. like, share, retweet.
What do you think is dragging the markets? 📈📉#cryptocurrency #InfrastructureBill #mining
— Cryptopolitan (@CPOfficialtx) November 16, 2021
