After a washout in the markets on Friday, the crypto market is slowly crawling back to health. Both Bitcoin and Ethereum are up about 2.5% in the past 24 hours, according to data site Nomics, and Binance Coin (BNB) is up 4.6%.
Smaller altcoins, which often crash the hardest when the markets take a turn for the worse, report even greater increases. In the past day, BitTorrent coin increased by 35%, Nano by 23% and WazirX by 21%.
One of the largest altcoins, Dogecoin, has also fared well. Dogecoin, a joke coin that’s sailed high on the dreams of speculators, who have backed the coin for its power to meme its way through the market, is up 17.39% in the past day. But at $0.27, Dogecoin is still way down compared to earlier this week; on Monday, a single Dogecoin sold for $0.4.
Dogecoin started its decline on Tuesday, April 20. The date, 4/20, is reserved for a celebration of cannabis, and rivals 1337 (“leet”, or “elite”) and 69 (uhh), as the internet’s favorite number. Dogecoin’s price rose by several hundred percent in the days leading up to 4/20 after fans ceremoniously labeled the date Dogecoin day, and tried to pump the price to $1.
Monday’s high price is a product of the hot air created by its fans, but its subsequent decline shows that Dogecoin day wasn’t mesmerizing enough to hit lofty ambition.
Why the market crashed
The tentative sea of green today, however, marks a brief and limited recovery from an almighty crash that wiped hundreds of billions of dollars from the global market capitalization of the cryptocurrency market.
At its current price of $49,871, Bitcoin has fallen about a third from its all-time high of $64,445, achieved on April 14. The latest crash started on Thursday, and some commentators attribute it to US President Joe Biden’s proposal to double capital gains taxes from 20% to 39.6%.
Biden announced Thursday plans to increase capital gains taxes for the wealthiest Americans. This affects ultra-rich Bitcoin HODLers (and aspirants), since this would increase their tax bills if they sold their holdings; capital gains taxes are levied whenever Bitcoin is bought or sold.
“There is a lot of new capital that has entered the market, some investors are still on edge and unverified negative news can cause a lot of short-term damage. That is what we are seeing,” Charles Storry, head of growth at DeFi index provider Phuture, told Decrypt yesterday.
The crypto market is highly sensitive to news—even if it’s unfounded. When Bitcoin’s price dropped by approximately $10,000 last weekend, traders, among them Darius Sit, co-founder of crypto investment fund QCP Capital, attributed the drop to a single tweet from Indian financial newswire FXHedge. The tweet, since deleted, said without evidence that the US Treasury was about to crack down on financial institutions.
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.