Bitcoin Drops Another 5%... Sign of Collapse or Just a Correction?

"US Government Collapse Talk" "No Legal Grounds to Ban" Conflicting Forecasts

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kim Suhwan] Bitcoin prices plunged 5% within 24 hours amid ongoing regulatory concerns from U.S. authorities. According to CoinDesk on the 25th (local time), Bitcoin's value dropped more than 5% compared to 24 hours earlier, reaching $47,900.

Investors are closely monitoring the moves of regulatory bodies such as the U.S. Treasury Department and the Securities and Exchange Commission (SEC). Earlier, as the U.S. government announced plans to raise capital gains taxes, signs emerged that the tax rate on gains from cryptocurrency investments would also be significantly increased, intensifying Bitcoin's downward trend.

The New York Post reported, "Rumors have recently spread that U.S. Treasury Secretary Janet Yellen might impose capital gains taxes on cryptocurrencies up to 80%," adding, "The government could potentially cause a Bitcoin collapse." Ray Dalio, founder of Bridgewater Associates and legendary investor, said, "If the U.S. government considers Bitcoin a threat to its financial system, implementing a Bitcoin ban is not an impossible scenario."

Janet Yellen, U.S. Secretary of the Treasury
[Photo by Reuters]

Currently, U.S. authorities and politicians appear to be moving urgently regarding cryptocurrency regulation. On the 20th, the U.S. House of Representatives passed the 'Innovation Obstruction Removal Act,' directing the SEC and the Commodity Futures Trading Commission (CFTC) to establish a task force to develop a regulatory framework for digital assets.

However, there are still many who remain optimistic about cryptocurrencies. Fox Business cited a source saying, "There are already talks that the SEC will approve a Bitcoin exchange-traded fund (ETF), making the possibility of banning Bitcoin unlikely."

There is also speculation that SEC Chairman Gary Gensler might offer regulatory easing on Bitcoin to gain Republican cooperation on issues like climate change. Hester Peirce, an SEC commissioner known as the 'Crypto Mom' for her crypto-friendly stance, emphasized, "There is no legal basis to ban Bitcoin as a peer-to-peer medium of exchange," adding, "What is important is to regulate illicit transactions."

Oppenheimer analyst Ari Wald said, "(The current Bitcoin decline) is merely a correction period before further gains." Nancy Tengler, an investment advisor at Raptengler, also analyzed, "Investors have long anticipated regulatory risks, so regulatory policies will not be a major issue."

On the other hand, JP Morgan analyzed, "Recent Bitcoin trading volumes have weakened, and if upward momentum is not regained, a prolonged downturn cannot be ruled out."

This content was produced with the assistance of AI translation services.