Why Is Bitcoin Crashing? Crypto Down Amid Reports Joe Biden To Raise Capital Gains Tax

Bitcoin and the wider cryptocurrency market have fallen in value amid reports President Joe Biden is set to increase capital gains tax on the wealthy to fund social care and provide universal education to pre-kindergarten children.

Bitcoin is down over 10 percent in the last 24 hours and down more than 20 percent over the past seven days, bringing the coin's price below $50,000 for the first time since early March.

Ethereum, the second-most valuable cryptocurrency coin, is down over 12 percent in the last 24 hours, and Dogecoin, which made headlines due to its significant rise in price last week, is down 27 percent in the same period, bringing it to $0.20.

On Thursday evening, Reuters reported Biden is set to roll out the largest-ever tax increase in investment gains—also known as capital gains tax.

The federal revenue raised from the increase will reportedly go to fund roughly $1 trillion in childcare, universal pre-kindergarten education, and paid leave for workers.

Capital gains tax applies to any profit made from an investment when the asset—such as a cryptocurrency or stock—is sold.

There are two types of capital gains tax in the U.S. Short-term capital gains tax applies to profits made from the sale of an asset held for less than a year. In this case the profits are taxed as ordinary income at the same rate as the individual's regular earnings.

Long-term capital gains tax is applied to profits made from the sale of an asset held for over a year. It is currently applied in rates of zero percent, 15 percent, or 20 percent, depending on the gains. The upper limit of 20 percent applies to profits over $441,450.

Biden is reportedly planning to almost double this upper limit to 39.6 percent for people earning more than $1 million.

Social media lit up with posts from the cryptocurrency community on the news. One wrote: "Market turned to full-blown scam. Thank you, Biden."

Cryptocurrencies are infamous for wild price swings and volatility due to market speculation. Despite this 2021 has seen a number of established platforms, such as PayPal and Visa, take steps towards wider adoption of cryptocurrency as a payment method.

The crypto market was not alone in seeing prices tumble on news of Biden's tax plan. On Thursday afternoon the Dow Jones Industrial Average turned sharply lower, down by 0.94 percent.