Has investor interest waned or is it a temporary breathing? The price of cryptocurrency bitcoin, which has skyrocketed, has recently been weak. According to the cryptocurrency site CoinDesk, the price of bitcoin is trading at around $53,000 as of 6 pm on the 26th. It jumped to the $60,000 level in the middle of this month, and then continued to decline, dropping 14% from its peak ($61,556).
Tesla CEO Elon Musk said on Twitter on the 24th that “You can buy Tesla with Bitcoin.” Reuters = Yonhap News
Up and down around 53,000 dollars… 14% decline from high
The bitcoin-related good news also failed to spark a rise in the stock price. An obvious example is that the effect of’Papa Musk’ (CEO of Elon Musk Tesla), which is called the investment loans of’ants’ (individual investors), has also decreased. Musk said on Twitter on the 24th (local time) that “you can buy Tesla with bitcoin from now on.” He said, “I will not convert the bitcoins I received from the purchase of Tesla vehicles into other fiat currencies.” However, it failed to display the bitcoin value.
Musk is a major player in the Bitcoin market. Over the years, it has led the price surge by pouring out comments in support of bitcoin several times. Earlier last month, after identifying himself as a “Bitcoin supporter,” he bought bitcoin worth $1.5 billion (about 1.7 trillion won), and claimed that “holding bitcoin is a less stupid act than cash.” Every time Musk mentioned Bitcoin, the price soared. On the 19th of last month, the market cap exceeded $1 trillion.
However, the reason Musk’s “poisonous” didn’t work this time is because an analysis showed that buying a Tesla car with bitcoin is not beneficial to consumers. US economic media CNBC reported on the 25th (local time), “If you buy Tesla with bitcoin, there is a possibility that you will pay more than cash payments.”
The reason is this. The U.S. Internal Revenue Service (IRS) classifies bitcoin as an investment asset, such as stock, rather than a fiat currency. For this reason, buying a car with bitcoin is subject to capital gains tax. Even if you buy the same $40,000 Tesla in bitcoin, you can get a tax bomb depending on the timing of the bitcoin purchase. If the holding period of bitcoin is less than one year, the market profit is classified as a short-term profit, and a normal income tax rate of 10 to 37% is applied depending on the total income. If the holding period is more than one year, an additional transfer tax of up to 20% will be imposed. “The timing of the purchase of cryptocurrency is important, and the tax rate will be determined accordingly,” said Gerrit Watson, senior analyst at Tax Foundation, an American think tank.
Bitcoin staggering. Graphic = Younghee Kim [email protected]
Foreign press “Bitcoin buys Tesla as tax bomb”
The forecast that US$1.9 trillion (about 2150 trillion won), which will be released into the market through the US economic stimulus, will not flow into the cryptocurrency market also affected the sluggish price. US economic media Bloomberg recently predicted that “the funds supplied as stimulus will flow to the real economy, not to the virtual currency market.” Pessimism about bitcoin is also considered a factor that prevents the price from rising. “Bitcoin will eventually become outlawed,” said Ray Dalio, founder of Bridgewater Associates, who is called “the legend of hedge funds”, “because central banks in each country want to monopolize monetary policy.”
Reporter Hwang Eui-young [email protected]
