Recently, California proposed a striking wealth tax plan—an additional 5% tax on ultra-high-net-worth individuals with assets exceeding $1 billion. Shockingly, unrealized gains from cryptocurrency assets could also be included in the taxable scope.

Once this news broke, the crypto community responded strongly. Industry leaders such as the CEO of Bitwise and the co-founder of Kraken voiced opposition, arguing that this move is akin to "draining the pond to catch the fish," and will inevitably lead to a large-scale migration of high-net-worth individuals and capital out of California.

What does this mean for the entire crypto market? The reality is straightforward—once the policy is implemented, whales holding large amounts of Bitcoin, Ethereum, and other assets may be forced to sell part of their holdings to cover taxes. In the short term, this selling pressure could directly impact market liquidity and cause price volatility. More deeply, it sends a clear signal: governments everywhere are increasing their focus on crypto wealth, and regulatory reach is extending.

However, several facts need to be clarified. First, the proposal is still far from becoming law, with a lengthy review process ahead, and industry opposition already serves as a significant constraint. Second, the resilience of the crypto market has changed compared to the past; the long-term landscape depends more on technological advancements and global adoption rates, rather than regional policies alone.

How should investors respond? The first step is to stay informed about policy developments and closely follow subsequent debates and voting progress. If the market experiences irrational declines as a result, small-scale investors might find opportunities to gradually build positions in quality assets; large holders should ensure their mindset remains stable and avoid being shaken out by short-term volatility. Most importantly, maintain disciplined investing—trade with spare funds, follow your strategy, and do not let short-term negative news shake your confidence.

In fact, the difficulty of passing this tax proposal is greater than many imagine. But it reminds us of an important reality: crypto asset liquidity is globalized, and capital and talent will inevitably flow toward policy-friendly regions. As market participants, deepening understanding and flexibly adjusting strategies are essential to seize opportunities amid changing circumstances.