Trump could reap a substantial tax windfall from a new crypto divestiture bill, raising fears of forced selling that would hit Bitcoin and Ethereum prices in the near term.
The crypto divestiture bill forces liquidation of Bitcoin holdings, creating immediate selling pressure. Trump’s tax windfall incentive could accelerate the bill’s timeline, heightening the risk of a supply glut. Bitcoin, as the most widely held digital asset, would absorb the bulk of mandated sales, dragging prices lower.
The exact amount depends on the scope of mandated divestiture, but given Bitcoin’s market dominance, a meaningful portion of trillions in crypto held by taxpayers could hit the market, potentially billions in sell orders.
Bitcoin could test recent support around $X, with a break below that triggering further downside toward $Y. Technical indicators may flash oversold if selling accelerates.
Ethereum, as the second-largest cryptocurrency, would also face forced selling under the divestiture plan. Its higher beta relative to Bitcoin means sharper price declines if large-scale liquidations occur. The bill’s passage could disproportionately hit Ethereum due to its lower liquidity compared to Bitcoin in stress scenarios.
Ethereum historically shows higher volatility and thinner liquidity during market stress. Forced selling could lead to outsized price drops compared to Bitcoin, which is more deeply traded.
If the bill passes but the selling is gradual, Ethereum may rebound once the overhang clears, especially if network fundamentals remain strong. However, short-term pain is likely.
A proposed crypto bill that compels divestiture of digital assets would hand Donald Trump a major tax break, fueling fears of forced selling in Bitcoin and Ethereum. If enacted, the plan could pressure prices as holders liquidate to comply, while Trump's tax advantage may speed the bill's passage. Bitcoin and Ethereum, the two largest tokens, are most exposed to any mandated sales.
The bill requires mandatory sale of specified crypto holdings, potentially generating capital gains tax revenue. Due to his past losses or tax provisions, Trump could offset gains against other losses, netting a tax windfall if the bill passes.
Mandated divestiture could flood the market with sell orders, pressuring prices lower, particularly for large-cap tokens like Bitcoin and Ethereum that are widely held and liquid.
Legislative prospects are uncertain, with crypto industry lobbying against forced sales, but Trump’s tax benefit may rally some political support. The bill’s future hinges on Congress’s willingness to enact such sweeping regulation.