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Bitcoin and Ether are dizzy as a result of the Biden tax concerns.

TOKYO, Japan (Reuters) – On Friday, the cryptocurrency Ether dropped dramatically from a record peak. However, Bitcoin fell as well, amid rumors that US President Joe Biden’s decision to lift capital gains taxes would discourage the value of digital assets.

The declines followed Biden’s announcement on Thursday of a slew of potential reforms to the US tax code, including a measure to almost increase capital gains taxation to 39.6% for those making more than $1 million.

Although social media was flooded with posts regarding the proposal harming cryptocurrencies and individual investors moaning about losses, traders and analysts said the drops are likely temporary, given the growing recognition of digital currencies as a legal asset class by retail and institutional investors.

“That’s what everybody is dreaming about right now,” said Chris Weston, head of analysis at Pepperstone Markets Ltd, a Melbourne-based foreign exchange broker.

“And I believe you’re dealing with any technical sale. Ether also served as the movement’s poster boy. It has outperformed Bitcoin by a large margin.”After reaching a new high of $2,645.97, Ether fell more than 10% to as low as $2,140. It was the last trading at $2,242.90, down 6.55 percent. Bitcoin fell 3.44 percent to $49,903.71, a loss of 3.44 percent.

According to Kelvin Wong of CMC Markets in Singapore, if Ether will stay above $1,955 heading into the weekend, its upward trend could continue.The next funding stage for Bitcoin is $40,665, but Wong still believes that investors will surface before that level is hit because the downturn seems to be overdone.

This year, Bitcoin has increased by 74%, while Ether has more than tripled. Both also outperformed conventional asset groups, aided by the entrance of major firms and institutional funds, such as Tesla Inc and BNY Mellon, into the cryptocurrency world.

Biden’s capital gains tax increase bill wreaked havoc on cryptocurrency trading in New York, spilling over into the Asian session, but traders expect peace to return shortly.

“Based on the bitfinex dogeusd at https://www.webull.com/quote/ccc-dogeusd tax scheme, Western funds began offloading Bitcoin vigorously,” said Avi Felman, lead investor, and fund manager of BlockTower Capital, a bitcoin and cryptocurrency investment group in New York. “In the end, news-driven sale typically reverses.”

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