Taxes, scammers, and hashrate are hitting Bitcoin price for now

BitcoinBitcoin is the first decentralized digital currency. It was created in 2009, by an anonymous founder or group of founders... More and most altcoins seem to be bearish this Friday. The price of the first cryptocurrencyA digital currency running on a blockchain and built with cryptography. Contrary to central-bank issued currency, cryptocurrency issuance rules are... has descended by over 26% since its last All-Time-High (ATH) of $64,800 back on April 14^th. Indeed, we had today the lowest price in the whole month so far: $47,700 per token. It already bounced back to over $50k, though [CoinMarketCap].

Possible reasons behind this decrease might be related to the planned tax reform in the United States, the recent scam by the Turkish crypto-exchange Thodex, and the fall of the hashrate in Bitcoin mining.

In the first case, Bloomberg reported yesterday that president Joe Biden is planning to increase the taxes over capital gains. It would be around 39.6%+ for those Americans earning $1 million or more. Plus, in the “capital gains”, earnings from cryptocurrencies are included.

Mark Yusko, CEO & CIO of Morgan Creek Capital Management, explained something about the stock market that could be applied to cryptocurrencies too.

“… many investors have significant gains at current prices. Fear of higher capital gains rate could motivate selling of those names [stocks] and trigger market correction, so some investors will try and front run that potential move by selling or hedging through short selling.”

However, the number of long-term Bitcoin holders is still steady, according to Glassnode. As for the scam by crypto-exchange Thodex, we must mention that its users are unable to withdraw their funds since several days ago. Meanwhile, Thodex’s Founder and CEO, Faruk Fatih Özer, fleed to Albania, carrying $2b worth of his users’ cryptos with him.

So far, 62 people were arrested, but a possible recovery of the funds is pending. This happened not long after the Turkish government banned cryptocurrencies for payments.

Decrease in Bitcoin hashrate

As we’ve mentioned before, China is still the great leader in Bitcoin mining. That’s why the recent security incidents in several coal mines in China’s Shanxi, Guizhou, and Xinjiang provinces also affected the Bitcoin hashrate. After some explosions, flooding, and mortal victims, the coal-based power stations in these regions started self-inspections and cut off the power as a precaution.

Subsequently, Bitcoin mining farms there turned off and the network hashrate decreased between 25% and 43%.  This means that the blockchain can be very slow and expensive during the next two weeks until the difficulty changes again.

Some people might think that this can be the end of the bullish market, but that’s not what prominent analysts think. The price corrections are very common, and we already had several of them this 2021, just before the price bounced back and reached new heights. Indeed, some analysts aim to $100k and $300k per Bitcoin in a few months.

Featured Image by Anna Nekrashevich / Pexels

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