The value of the cryptocurrency market stood at $1.81 trillion on Friday, a 10.26 percent drop over the last day, according to data from coinmarketcap.com.
CNBC reports that over $200 billion of value has been wiped from the entire cryptocurrency market.
At 11:45am on Friday, Bitcoin was down over 8 percent in the last 24 hours at $49,465, falling below the $50,000 mark for the first time since early March.
Ethereum, the second most valuable cryptocurrency in terms of market capitalisation, slumped 8 percent to trade at $2,274.
According to the news agency, the loss suffered by Bitcoin and other cryptocurrencies is driven by fears of a proposed capital gains tax hike by the U.S. President Joe Biden administration.
The Biden-led government is expected to raise long-term capital gains tax for the wealthiest Americans to 43.4%, including a surtax. That would be higher than the top federal tax rate on wage income. The new tax rate would apply to returns on assets held in taxable accounts and sold after more than a year.
This triggered a sell-off in stock markets overnight, with all three major U.S. indexes ending Thursday’s session in the red.
Analysts said fears over Biden’s capital gains tax proposal may be extending to crypto investors, who have had a great year with the price of bitcoin having climbed more than sixfold in the last 12 months.
“The market has run up quite a bit overall, and it’s probably cooling off before the next leg up,” Vijay Ayyar, head of business development at cryptocurrency exchange Luno, told CNBC.
Virtual currency, especially Bitcoin has gained acceptance among mainstream investors and companies, such as Tesla Inc, Mastercard Inc and BNY Mellon.
Goldman Sachs, a multinational investment bank, said it will begin to offer investment opportunities in bitcoin and other digital assets.
Meanwhile, the Central Bank of Nigeria recently directed banks and other financial institution to close accounts of persons or entities involved in cryptocurrency transactions.