Bitcoin below $50,000 due to Biden tax plans

Cryptocurrencies suffered heavy losses on Friday on fear of that US President Joe Biden's plan to raise capital gains taxes to reduce investment in digital assets.

The selloff came after reports that the Biden administration was planning a changes to the US tax code, having a plan to closely double taxes on capital gains to 39.6 percent for people earning more than $1 million.

Bitcoin, the biggest and most popular cryptocurrency, slumped 7 percent to $48,176, falling below the $50,000 mark for the first time since early-March, while smaller rivals Ether and XRP fell around 10 percent.

The tax plans shaken up the markets, prompting investors to book profits in stocks and other risk assets, which have rallied heavily on hopes of a good economic recovery. Bitcoin is on track for a 15 percent loss on the week, though it is still up 65 percent since the start of the year. Ether dropped more than 10 percent on the day to as low as $2,107.

While social media platforms up with posts about the plan hurting cryptocurrencies, and individual investors complaining about losses, traders and analysts said declines are likely to be temporary amid growing retail and institutional investor acceptance of digital currencies as a good asset class.

It will be better to stay away from cryptocurrency until a clarification arrives.