Bitcoin and cryptos fall due to Taproot and Biden's infrastructure bill
Bitcoin moves away from its November 10th, all-time high on Tuesday, as it loses ground below $61,000, weighed down by several factors. The market has been affected by the dampening of investor enthusiasm around the Taproot upgrade of the Bitcoin blockchain, the demands on US brokers in US President Joe Biden's new infrastructure bill and statements by Twitter's CFO. Therefore, the market leaves drops of 8% on average.
The short-term technical aspect sends indications that the ongoing pullback may extend to levels around $57,000, experts warn. Moreover, the cryptocurrency queen's performance in October, when it staged a rally of more than 40%, suggests that the upgrades that were triggered on Sunday were already discounted in price.
As for the 'altcoins', red also prevails, with Ethereum on its way to $4,300. The total market capitalization is $2.65 trillion.
The pessimism of the last few hours was also contributed to by the signing of the infrastructure bill by US President Joe Biden, which was made official in the early hours of this morning.
The bill, as passed, will apply stricter rules to companies handling cryptocurrencies and expand reporting requirements for intermediaries. The bill requires that, going forward, transactions in digital assets worth more than $10,000 must be reported to the Internal Revenue Service. A group of senators originally proposed an amendment to the bill that would have clarified the tax reporting requirements for cryptocurrencies, but the proposal failed to gain approval in August.
In recent hours, Bitcoin has also been slammed by statements from Twitter's CFO, who has stated that investing in cryptocurrencies "doesn't make sense right now."
Investing some of Twitter's corporate cash in cryptoassets like Bitcoin "doesn't make sense right now," Ned Segal stated in an interview with 'WSJ'. "We would have to change our investment policy and choose to own assets that are more volatile," Segal declared, adding that the company prefers to hold less volatile assets such as equities on its balance sheet.
WHAT TO EXPECT
"It seems like the Bitcoin bulls are losing power, and they are likely to struggle soon as well, especially if the price breaks below the 50-day SMA on the daily time frame," comments Naeem Aslam, analyst at Ava Trade. Having said that, "Bitcoin was well due for a correction according to the RSI indicator, and that correction is finally here," he adds.
From a technical point of view, "if the price continues to stay above the 50-day SMA, we could see another substantial rally for Bitcoin," the expert states.
Aslam also notes that "the biggest fear among crypto traders is whether crypto winter is here." "No one wants to see another crypto winter as it is difficult to forget the dire consequences of the previous one." "Moreover, what traders have been hoping for is a strong rally especially given the fact that during this time of the year, we usually see a strong rally for cryptos--of course, with the exception of the crypto winter," the expert concludes.