Prices of the world’s biggest cryptocurrency, bitcoin, fell over 13% on Friday to slump below the $50,000 level for the first since 8 March on US president Joe Biden’s tax plans. Bitcoin (BTC) dominance has also dropped below the 50% mark for the first time since 2018.
This metric is the ratio of the largest cryptocurrency’s value to the overall market capitalization of digital assets, and shows how the crypto space is evolving with time.
At 6.40pm IST, bitcoin was trading at $49,461.27, down 10.3% after moving in a wide range of $47,881.58-55,353.75 over the past 24 hours, as per Coingecko. The digital asset is now trading 24% lower against its all-time high of $64,804.72 hit on 9 April.
“Last week, Coinbase stock price was not able to hold its hyped valuation, and at that time bitcoin was also in a neutral zone. Yesterday’s news on Biden planning on wealth tax of up to 44% was a blow to trigger the low hanging market. This week’s closing is important to understand the direction bitcoin is going to take,” said Siddharth Menon, co-founder and chief operating officer, WazirX.
According to Menon, current bitcoin price has a key support at the $48,000 level. “If we break this, we could see some bearish summer with key support to watch around $42,000 and $37,000. However, based on the momentum we have picked up over last coupon of months, this correction is good,” he added. Menon is also of the opinion that the current correction will not last long.
Added Sumit Gupta, Co-founder & CEO, CoinDCX: “The fear of capital gains tax proposal may have crept over crypto investors. However, these are temporary phases and we expect the prices to recover soon.”
However, other experts are not positive on bitcoin. “Bitcoin price lately has been witnessing a sharp decline. Several analysts have pointed out that a bear market may prolong for a while,” said Ashish Singhal, chief executive officer and co-founder, CoinSwitch Kuber.
Meanwhile, the world’s second-biggest cryptocurrency, ethereum, which hit its all-time high of $2,640.37 on Thursday, slumped as much as 14% to hit a low $2,133.48 for the 24-hour period.
For the 14-day period, bitcoin is down over 15%, while ethereum is 8% in the green. Over the past few months, many investors have started to diversify out of bitcoin as shown by its falling dominance ratio.
“Ethereum is disrupting the way the contract based agreements industry with the usage of blockchain technology. Like how bitcoin became a known disrupter for transactions, it will soon be Ethereum’s turn to disrupt many industries which stand on pure contracts,” said Sathvik Vishwanath, co-founder and CEO, Unocoin.