A hypothesis is circulating regarding the drop in the prices of Bitcoin and Ethereum these days.
Indeed, over the last week, the price of BTC has lost 8%, while that of ETH has lost 10%.
The beginning of the price drop of Bitcoin and Ethereum
The day on which the decline began for both was November 15, at almost the same time.
Moreover, this time also corresponds to the opening of the US stock exchanges after last weekend.
These indications strongly suggest that the drop was triggered by something that has strictly to do with the US markets, so much so that on the same day at the same time, the Dollar Index also started a new phase of growth, which in the space of two days recorded the highest values ever for the whole of 2021.
The Infrastructure Bill’s tax issue
As early as the next day, November 16, Bloomberg had speculated that the drop of 15 had been triggered by new tax reporting requirements for digital currencies included in the US infrastructure bill that President Joe Biden signed into law on Monday.
The timing fits, and the fact that since Monday the price of Bitcoin has essentially done nothing but hover around $60,000 would seem to further support this hypothesis based on a US regulatory change that has now become final.
The main problem is that this bill expands the definition of “broker” for the purposes of the Internal Revenue Service. There is a real risk that the new definition of the term will extend the tax requirements of exchanges to include miners and other crypto operators.
The new legislation requires all brokers to report all transactions over $1,000 to the IRS, including the users’ social security numbers and the nature of these transactions.
However, as of today, it is still unclear what the correct interpretation of the new legal definition of a broker should be, not least because in financial parlance a broker is an intermediary who handles investments or investment transactions on behalf of a third party, and this “historical” definition would not include miners or those who passively manage their users’ crypto funds, such as wallets.
Traders are pondering
In other words, while the bill has been approved by President Biden, there is still a great deal of uncertainty as to how it will apply to the crypto world, and in particular what changes it will impose on the industry.
In this phase of uncertainty, investors and traders seem to have taken a moment of reflection, so much so that the price of the main cryptocurrencies, Bitcoin and Ethereum, has in fact come to a standstill.
It remains to be seen how this situation will evolve, and whether it will do so soon or not.