Cryptocurrency Ether pulled back sharply from a record high and rival Bitcoin also fell on Friday amid speculation that U.S. President Joe Biden’s plan to raise capital gains taxes will curb investment in digital assets, Trend reports citing Reuters.
The drops came after Biden on Thursday unveiled a raft of proposed changes to the U.S. tax code, including a plan to nearly double taxes on capital gains to 39.6% for people earning more than $1 million.
Ether plunged more than 10% to as low as $2,140, a day after climbing a record $2,645.97. It last traded down 6.55% at $2,242.90.
Bitcoin also weakened, falling 3.44% to $49,903.71.
If Ether manages to hold above $1,955 going into the weekend, then its upward trend should remain intact, according to Kelvin Wong at CMC Markets in Singapore.
The next support for Bitcoin is at $40,665, but buyers are likely to emerge before that level is reached because its decline looks overdone, Wong also said.
Bitcoin has risen 74% this year, while Ether has more than tripled. Both have massively outperformed traditional asset classes, bolstered by the entry of mainstream companies and large investors into the cryptocurrency world, including Tesla Inc and BNY Mellon.
Biden’s capital gains tax hike plan caused turmoil during New York trading of cryptocurrencies that spilled into the Asian session, but calm is likely to return soon, traders said.