WHY DID THE CRYPTO MARKET CRASH?

This past week has been crazy for the crypto space and not in a good way!

Bitcoin “BTC” went $65000 on April 14th to $47000 on the 23rd… that’s almost a 28% drop!

As almost every crypto tends to follow Bitcoin’s price movement, we saw almost everything on red with the exception of EthereumETH”.

Surprisingly, Ethereum is only slightly lower today than it was on April 14th… and not only that, it even surpassed the previous ATH (all time high) and reached $2644.

But why did this crash happen?

It was announced that the US President, Joe Biden, will propose almost doubling the capital gains tax rate for wealthy individuals to 39.6%, and that not being the only tax, investors could pay up to 43.4% of all gains. And, if for investors that live in California, it gets even worse because California has its own tax laws, so investors will have to pay 57% of all gains….

57% of all gains go to the government

The market reacted to this and we saw a big sell-off because the big Wales decided that was better to take some profits now before the tax rate increases.

All this aligned with the fact that the real rate of inflation and its effects are still to be seen, is making investors sell part of the portfolio and keeping cash in hands, waiting for a big dip opportunity.

However, if we take a look at the BTC graph for of 2021 we can see that it is still trading at a much higher price than what it was back in January. We can also notice that whenever it reaches a new All Time High, a significant drop happens but eventually recovers and repeats this cycle again.

Will the market keep dropping, or are have we reached the bottom of the dip?

No one knows, but I like to see the dips as discounts to take advantage off.

Why is it that people get excited when they see their favourite restaurant, shoes or videogames with a 50% discount, but when when it comes to stocks/crypto currencies, they get scarred?

No one will ever be able to predict when and how far the dips will come, so I don’t worry too much about it and invest consistently.

That will be all for today.

Until next time.

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