Bitcoin Price Rises Despite Italian Crypto Tax Hike
The Italian government has announced plans to raise the tax on cryptocurrency, including Bitcoin. It comes at a time when Bitcoin prices are on the rise. In this article, we discuss the implications and the effect on the bitcoin price prediction in the coming months.
Bitcoin has always been volatile. However, in the past few years, changes have begun that have seen it accepted in the traditional finance mainstream. In a move to regulate and benefit from it, Italy has introduced new tax laws on capital gains earned from cryptocurrency. In the article below, we discussed the changes and impact on the bitcoin price.
Italy’s Raise on Capital Gains
The Italian treasury plans to raise the capital gains tax on Bitcoin from 26% to 42%. The news was broken in a statement by Deputy Economy Minister Maurizio Leo the past week. It came up in discussions about Italy’s forthcoming budget for 2025. He was speaking at a news conference at Palazzo Chigi, where he added that this has already been approved. The 62% increase is part of a move to generate funds that can go back into families, young people, and local businesses. It is also seen as a move by the country to help stabilize its weak economy.
Italy already has a digital services tax, which some believe is stifling the country’s growth. Known as the web tax, it was introduced in 2019 as part of the country’s budget. The web tax applies to any company that earns at least 750 million euros per annum. They must also make at least 5.5 million euros from digital services in Italy. While Bitcoin withholding tax will increase, the government is looking at removing the ceiling on webtax.
In Italy, a declaration of earnings is known as “Redditi Persone Fisiche”. An individual is expected to write down all forms of income on it. They must state any capital gains made from sales such as staking rewards. Crypto assets must also be listed in a form that comes under dedicated foreign financial activities.
Bitcoin Continues to Rise in Price
Despite this announcement, the Bitcoin price prediction is that it will continue to rise. Many see the incorporation of digital currencies into the rules and regulations of traditional financial institutions as something that will bolster the price, and even push it towards new heights.
In fact, many are predicting that this and a range of other factors are hinting Bitcoin is not going to start a bull run but already has. After being fairly tepid since May, last week saw it spike then rise by a further 5%. It now has the largest reading since April and is on a ten-week price high at $67,800.
Confidence has been helped by the backing of Bitcoin ETFs receiving several large inflows. These exchange-traded funds were introduced in January, and have had a positive reaction ever since despite a few minor outpours. They have been viewed as a more secure way for traditional finance investors to get involved in Bitcoin, hedging against its inherent volatility. In 2021’s first quarter, they had nearly 9,000 BTC average inflows per day.
The previous record high for Bitcoin is $73,700, set in March of this year. After trading above $68,000 on Wednesday, a few more whales pushing it could make it break its record. However, it is now reaching a psychological barrier. Dips were seen in September which started with panic-inducing sell-offs. As Bitcoin approaches this price threshold, it will not take much to see it happen again.
Traditionally, when Bitcoin moves up in price and backs away from its competitors, it does so at their expense. This run has proven no different, with the prices of altcoins flatlining or having little positive movement since Bitcoin edged upwards. The only altcoin to buck the trend has been DOGE. This jumped in value on Wednesday making a huge jump of around 5.8% by Wednesday.
Markets in Crypto Asset
While it may seem to be punishing those involved in crypto activity, the Italian government has shown that it can be quite receptive to the concept in the past. In 2023 the central bank backed research into an Ethereum network named Polygon. Its aim was to develop an Institutional DeFi for Security Token.
The move pre-empts the European Unions Markets in Crypto Asset (MICA) regulation later this year. Its aim is to establish a unified regulatory system to protect consumers in the market. Similar attempts by other countries have proved troublesome as investors simply moved their assets to offshore accounts.
Italy’s regulatory changes have seemed to impact the price of Bitcoin. If anything, these changes only make people more confident in just how seriously Bitcoin is being taken by global financial institutions. For Italy, there are also countries like the UAE that are making leaps and bounds in the incorporation of digital currency into everyday life.
Where the price will go in the near future is anyone’s guess. If Bitcoin does reach a new high, it will inevitably encounter a dip beforehand and you may want to wait until then to buy. If not, you should keep an eye on the markets for any major changes.
