Ryan Selkis, the CEO of Messari, declared during an interview with CNBC that the proposed tax hike on capital gains of the Biden administration could actually be bullish for crypto and DeFi.
Selkis believes that investors could turn to DeFi as a way of increasing the federal capital gains tax rate to as much as 43.4% from the current 23.8%, according to DailyHodl.com.
“If you think about this capital gains issue, one of the unintended consequences might be that more capital’s locked in this crypto ecosystem long term and medium term. Ultimately, that’s going to be to the benefit of this entire new class of assets.
They’re referred to as DeFi assets, essentially, being able to borrow against existing crypto holdings rather than sell them and trigger a taxable event. You might have structurally higher interest rates. You might have a better tax set up to invest in those assets and those protocols in that ecosystem versus taking money out of the equation. So I still think that there’s a lot of upside in this market.”
Regarding the Bitcoin correction that we are currently experiencing, Selkis declared that the dip may convince other people to join:
“If you look at the performance, just year-to-date, the total crypto market cap is still up 100%. Bitcoin is still up 65%, so even though we come back at about 25%, that’s just the normal course of volatility. If you look at any other time period outside of the one week, 24-hour, and one month, Bitcoin and crypto at large are still the highest performing asset classes and the highest performing mega assets, so this could be a good buying opportunity.”
Selkis has also explained why he believes that the crypto market has yet to reach the top:
“Believe it or not, even though we’ve had a major run-up this year, we haven’t seen something analogous to the last couple of cycles where the local top and that cyclical top is really marked by a doubling of Bitcoin and Ethereum price in less than a week, which is an insane pace of growth. We haven’t seen anything close to that, so I think if you’re looking for a blow-off top, this probably isn’t it. It’s probably just that usual course of volatility, and we’d actually expect in a typical bull cycle to have six pullbacks of about 30% or more. We’ve had three so far versus six in 2017, for instance.”