On Thursday, Joe Biden shared plans to double capital gains tax in the US to nearly 40 percent for anyone earning more than $1 million a year. Bitcoin fell by more than six percent when Mr Biden announced the news – hitting the lowest level since early March.
Cryptocurrency prices are notoriously volatile. Dogecoin has also experienced a decline in recent days.
White House Press Secretary, Jen Psaki, responded to criticism over President Biden’s plan and its potential impact on investors.
She said: “His [Joe Biden’s] view is that that should be on the backs of the wealthiest Americans who can afford it, and corporations and businesses who can afford it.
“And his view and the view of our economic team is that that won’t have a negative impact.”
Cryptocurrencies are counted as assets on which profits can be taxed, according to the US government, meaning wealthy crypto holders will lose out if the plans are enshrined into law.
If the new tax plans are passed, capital gains will rise to nearly 40 percent for wealthy individuals earning more than one million dollars a year.
The application of capital gains tax on cryptocurrencies helps prevent tax evaders from hiding their assets.
The President will need the full support of his party in order to pass the tax plans through Congress – and is expected to experience resistance from Republicans.
He added it “might come this weekend, or next week or perhaps not at all.”
There is currently around $930 billion of bitcoin in circulation in the digital currency market with America being one of the largest trading markets for private bitcoin investing.
The global digital currency market is estimated to be worth $1.9 trillion.