prices of bitcoin (BTC), ether (ETH) and other major cryptocurrencies in the market tumbled this Tuesday (16). These assets had already been facing sales pressure since the last records recorded last week. Now, negative comments from Twitter’s chief financial officer, new tax rules in the US and the rising US dollar all contributed to today’s devaluation.
Bitcoin and ether drop nearly 20% from new records
According to the index CoinDesk, bitcoin has come to be traded by US$ 58,6 mil this morning, accumulating about 6% depreciation in the last 24 hours. Compared to your current price record of $68.9 thousand, recorded on November 10, the main cryptocurrency on the market has already lost almost 20% in value since then.
Ether, the second largest digital currency in market value and native to the Ethereum blockchain, registered around 7% of decline in the last 24 hours. The cryptocurrency also set new records last week, coming to be traded for up to US$ 4.865, but its price plummeted to $4,111 this Tuesday.
The market movement is already expected. Whenever these digital assets hit records, a surge in sales follows, the result of investors capitalizing on the appreciation of cryptocurrencies. However, there are other factors that have driven this trend.
“It doesn’t make sense to invest,” says Twitter’s CFO
Recent comments by Twitter CFO Ned Segal have potentially contributed to the devaluation of bitcoin and ether. The executive stated in an interview with Wall Street Journal to invest in cryptocurrencies “does not make sense” at this time, referring to the possibility of the giant of social networks entering this market.
He cited price volatility and the lack of appropriate fiscal rules for this type of asset as the main characteristics that prevent the company from diversifying its investment portfolio. Although there was no rumor or any expectation about a possible entry of Twitter in this sector, brokerages around the world noticed the acceleration in the pace of sales soon after the report of the Wall Street Journal be published.
Of course, Segal doesn’t have the same influence that other entrepreneurs (Elon Musk) exert on the cryptocurrency market. The selling trend was also driven by other political and economic factors.
US government passes new rules for cryptocurrencies
The spotlight is on new US cryptocurrency tax rules, implemented after President Joe Biden signed the $1 trillion bipartisan infrastructure project this past Monday. With it, a new law determines that brokerages must declare to the IRS information about digital currency transactions whose value exceeds US$ 10,000.
However, these new rules worry the crypto community. It turns out that the definition of “broker” has become broad and vague, opening up dangerous loopholes for the US government to incorrectly treat blockchain software developers, digital wallets and cryptocurrency miners as brokers, thereby including them in the new tax requirements.
Dollar rises and makes bitcoin less attractive
Last but not least, the dollar price is another factor that is undermining the value of major cryptocurrencies. Especially in the last two years, insecurity about the US currency has led many people to companies to bet on bitcoin, for example, as store of value, protecting itself from currency devaluation and inflation.
However, as the dollar rises and demonstrates greater stability, the use of these cryptocurrencies for this purpose is weakened. Even so, given the market turmoil about future metaverse projects, NFTs and decentralized finance, both bitcoin and ether still have the potential to hit new price records.
With information: CoinDesk, Wall Street Journal