- Bitcoin’s price has dropped below the significant support level of $20,000 due to a confluence of factors that have created Fear, Uncertainty, and Doubt (FUD) in the industry, including the proposed 30% tax on Bitcoin miners by President Joe Biden’s government.
- Other major concerns in the crypto ecosystem include the Silvergate Bank collapse, crackdowns on startups, and the potential anti-crypto agenda of US regulators and lawmakers.
Bitcoin, the premier cryptocurrency, is experiencing a significant drop in price as it falls below the psychologically important support level of $20,000. At the time of writing, Bitcoin’s spot price is $19,872.38, down 8.46% over the past 24 hours and over 11% in the last seven days. This latest price slump is caused by a confluence of factors that have created Fear, Uncertainty, and Doubt (FUD) among stakeholders in the industry.
One of the most concerning events that contributed to the drop in Bitcoin’s price is the proposed 30% tax on Bitcoin miners by President Joe Biden’s government. The American government’s plan to tax Bitcoin miners at such a high rate has been called ridiculous by many industry experts. If implemented, this tax could significantly weigh down the Bitcoin mining sector in the United States and could potentially shift the ranking of the country as the next superpower in cryptocurrencies. It could also lead to a financial strain that many miners may be unable to cope with.
Besides the proposed tax, there are other major concerns in the crypto ecosystem. The collapse of Silvergate Bank and the potential contagion effect on the industry is a significant concern. Although crypto has been exonerated as the culprit behind the collapse, fears of retribution from regulators are still present. The crackdown on startups in the crypto ecosystem has also entered a new phase with the United States Attorney General (USAG) suing KuCoin for offering assets, including Ethereum (ETH), as securities.
Experts have pointed out that the recent bouts of company collapse and bankruptcies might fuel the anti-crypto agenda of US regulators and lawmakers, which could push them to cut crypto off from the banking system. As a result, the potential aftermath of these proceedings and other bearish events might keep crypto prices down for a while, and investors will need to stay alert at all times.
In addition to the factors mentioned, there are other negative pressures affecting the digital currency ecosystem. One such factor is the increasing concerns over the environmental impact of Bitcoin and other cryptocurrencies. As the energy costs of mining cryptocurrencies continue to soar, there are growing concerns over the carbon footprint of the digital currency industry. This has led to calls for more sustainable mining practices and the development of more eco-friendly cryptocurrencies.
Another issue affecting the industry is the lack of clear regulations and guidelines. The regulatory landscape for digital currencies is still evolving, and many countries are grappling with how to regulate this new asset class. The lack of clarity and consistency in regulations has created uncertainty and has made it challenging for businesses and investors to navigate the digital currency space. Additionally, the rise of decentralized finance (DeFi) has brought about new challenges, including the risk of hacking and fraud, and the need for new regulatory frameworks to ensure investor protection.
