Bitcoin prices have been experiencing notable gains in recent weeks, rising to a new multi-month high this weekend. Many variables point towards the possibility of compelling increases later in 2021; several variables could influence their direction.
CoinDesk figures reveal that the world’s most famous digital currency rose by $48,126.47 to Saturday, August 14.
The cryptocurrency was at its highest level since May 16, additional CoinDesk data indicates.
[Ed note] Investing in cryptocurrency coins or tokens can be highly speculative as the market remains largely unregulated. Anyone thinking about it should expect to lose their entire investment.
IRS Update
After Friday’s Bloomberg article clarified industry participants, the innovative digital asset saw these gains.
The article cited a Treasury Department official who stated that the IRS intends to stipulate that market participants would only comply with current reporting requirements if the agency considers them brokers.
Bitcoin plummeted after climbing to its highest point in just three months. It fell to nearly $45,600 yesterday before rising above $48,000 again today.
Jesse Proudman is the co-founder of Strix Leviathan crypto hedge fund and serves as CTO.
“Bitcoin rose this weekend due to news that the IRS will ignore the crypto guidance in The Infrastructure Bill and choose to enforce tax reporting obligations only from brokers that conform to the traditional definition,” he said.
“Concerns about the possibility that miners or developers would have to comply with reporting requirements that aren’t technologically feasible caused enough uncertainty that Bitcoin dropped to almost $44,000 on Friday morning. Only to rebound over the weekend,” the executive said.
He also gave some perspective on recent digital currency momentum. Since the above fluctuations, “Bitcoin demonstrated robust support for [us] to continue the trend toward higher highs and lower lows.”
TrendSpider’s chief market analyst Jake Wujastyk commented on the latest price movements for digital currencies, saying the following:
“Bitcoin’s recent run was huge, with prices jumping from $29k up to $48k in less than a month. It is normal to profit-take when this type of movement happens in such a short amount of time. Prices pulled back to critical levels below, often just points on the chart where the breakout occurred.
He stated that Bitcoin supply was in the $48k region as shown by the anchored volumes by price measuring volume distribution at the beginning of the calendar year.
“The $48k ‘breakeven supply” zone will continue to be resistance until the price can close above that level.”
Wujastyk also expressed concern about the digital currency’s acceptance.
“In terms of potential downside levels, you should be watching the anchored volume-weighted mean price from the all-time highs. This was Bitcoin’s main breakout level back in early August. This area is currently at $42k.”
“However, as long as the cost remains above this level, the volume-weighted mean price will start to rise and will change with price action,” he said.
Julius de Kempenaer was a senior technical analyst at StockCharts.com and provided similar insights.
“After breaking through the $30k-42.5k trading range, BTC rapidly moved to the next area resistance between $47.5k-50k, where we are currently trading. The old resistance region (the highest point in the former range) of $42.5k is now a support area and should catch any drops from current levels.
He said, “If any decline occurs and a new lowest is established at a level greater than $42.5k, that is a sign of strength.”
“It indicates that buyers are competitive and are willing to buy at higher levels.”
He also discussed the resistance to digital currency.
De Kempenaer said, “$47.5k-$50k is the obstacle BTC is currently facing.”
It’s derived from the significant lows of March and April this year. Breaking above that range will allow for a further rally to $60k.
Bullish Outlook
Experts have provided some insight into bitcoin’s resistance and support levels. Still, analysts also spoke about the favorable backdrop that the currency has, which includes several factors that could provide significant upside over the next few months.
Proudman offered his opinion, emphasizing many key metrics that could indicate gains.
“With an increase in active wallet addresses, new address, and on-chain transactions, all indicators that often are a retail sign trader are increasingly active crypto, and Bitcoin $50,000 looming, we believe the rest of 2021 has all the hallmarks for an exciting time being involved with this asset type.
Sean Rooney from Valkyrie Investments was also present to discuss the situation.
“I expect the discussion about bitcoin as a ‘hedging to inflation and uncertainty’ will be reenergized as the macro picture begins to shape heading into Q4,” said he.
“It is evident that bitcoin will be less available on exchanges in the coming months. This should provide a tailwind for the price.”
William Noble, a chief technical analyst of Token Metrics’ research platform, presented his viewpoint. He emphasized that while market observers focus on bitcoin’s daily price movements, they should also “zoom-out” to see the longer term.
He said that a Fed announcement caused Monday’s dip to taper in the second half of 2022.
“The Covid situation might get worse by 2021 and beyond,” Noble said that this means the Fed will have to print more currency and not less money if it is true.
This could create a golden opportunity for BTC to be bought on small dips at $43k.”
