- The crypto ecosystem has dropped in valuation with Bitcoin leading the selloffs.
- Fears surrounding Silvergate Bank and President Biden’s new tax rule are among the core triggers of the ongoing selloff.
The digital currency ecosystem is experiencing a lot of negative pressures at this time with the price of the premier cryptocurrency Bitcoin (BTC) dropping below the psychologically important support level of $20,000 on fears of a higher tax rate. At the time of writing, Bitcoin is changing hands at a spot price of $19,872.38, down by 8.46% over the past 24 hours and by more than 11% within the trailing 7-day period.
While Bitcoin is not new to such price crashes, this latest slump is caused by a confluence of factors that sent Fear, Uncertainty, and Doubt (FUD) to stakeholders in the industry. One of the most concerning events is the new supplementary budget explainer showing the plans President Joe Biden’s government has for Bitcoin miners.
According to the budget, the American government wants to tax Bitcoin miners at a rate of 30%, an amount that many industry experts have tagged as being highly ridiculous. While this can significantly weigh down the Bitcoin mining sector in the United States, it also has the tendency of shifting the ranking of the country as the next superpower when it comes to cryptocurrencies.
As it stands, the global economy is unfriendly to the Web3.0 ecosystem and the energy costs that have continued to soar have plunged a number of dominant crypto miners firms into states where they have become non-operational. Should the 30% taxation be implemented, it may stir such a financial strain that many miners may be unable to cope with.
Other Major Concerns for the Market Beside Bitcoin Tax
According to a tweet from Changpeng “CZ” Zhao, the co-founder and Chief Executive Officer of the Binance cryptocurrency trading platform, after sleeping for just 4 hours, he woke up to a series of news that is the capital stirring the slump in the crypto market as seen today.
Slept for 4 hours, woke up to:
Silicon Vally Bank troubles
USAG Sues KuCoin
Whitehouse wants 30% tax on mining electricity
Huobi token flash crash
Other crypto prices dips a bit#bitcoin still producing blocks.— CZ 🔶 Binance (@cz_binance) March 10, 2023
One major concern the crypto ecosystem is nursing right now is what the contagion effect of the Silvergate Bank collapse will have on the industry. While crypto as an asset class has been exonerated in being tagged as the culprit that fueled the collapse of Silvergate Bank with a similar strain being faced by Wall Street giant, Silicon Valley Bank, fears of retribution from regulators are not eroded yet.
Experts have pointed out that the recent bouts of company collapse and bankruptcies might fuel the anti-crypto agenda of US regulators and lawmakers thus pushing them to cut crypto off from the banking system.
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Besides this, the crackdown on startups in the crypto ecosystem entered a phase with the United States Attorney General (USAG) suing KuCoin for offering a number of assets, including Ethereum (ETH), as securities.
The potential aftermath of the proceedings as well as the other bearish events might keep crypto prices down for a while and investors will need to stay on the alert at all times.
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