Bitcoin Price Falls Below $60K As Biden Signs Infrastructure Bill
Bitcoin recorded its worst daily performance in months yesterday, falling from Monday’s high of $66,000 to below $59,000 before reclaiming the $60,000 support level. This slump, which represents an over 10% decline, has been the worst since September. The resulting sell pressure has caused most altcoins to follow suit by triggering selloffs, as is the case when Bitcoin’s price sets a new trend.
Bitcoin Price Analysis
Looking at the charts throws up some intriguing but somewhat bearish sentiment in the shorter time frame for investors. The 20-days exponential moving average, which gives insight into the market’s direction, shows a trend reversal. Despite the line acting as a support for Bitcoin for a couple of days, Tuesday’s close of $60,000, fell well below the trendline. This indicates a possible build-up of bearish momentum.
The situation seems better for medium-term holders as the 50-day moving average held as a support level. Bitcoin has failed to break through the $68,000 psychological resistance level after two attempts in previous weeks. A bounce from here to the upside would be great for bulls, whereas a close beneath these levels may see more market participants take short positions. Another daily close is, however, needed to confirm either a trend reversal or continuation.
The relative strength indicator (RSI), which oscillates to measure the market’s general momentum, seems to paint a more positive narrative. The 14-day RSI on the 4-hour timeframe shows a vastly oversold position. This likely indicates that sell pressure on Bitcoin may have waned, with the market possibly set for a rebound. However, the oscillator needs to show a bullish divergence by printing a higher low against lower lows to confirm this.
Overall, the market situation looks bearish for the short term and remains bullish in the medium to long term.
Changing Market Sentiments
Despite the brief rally and recovery in Bitcoin’s price, general market sentiment has shifted from extreme greed to normal greed levels. This shows that investors remain optimistic about the market and the possibility for new highs.
Twitter’s chief financial officer Ned Segal, has hinted that institutional investments in Bitcoin “doesn’t make sense right now”. Despite Twitter CEO Jack Dorsey being an avid Bitcoin fan, Segal reiterated the company’s preferences to hold less volatile assets on its balance sheets.
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Possible Effect of New Infrastructure Bill
Furthermore, the fall in Bitcoins price may be linked with the new infrastructure bill signed into law by President Joe Biden on Monday. The new regulation, which crypto advocates have said is controversial, has been a source of concern. Although aimed at providing funds needed for major infrastructure projects, US lawmakers incorporated crypto-related language before its passage.
The bill, as enacted, imposes strict controls on organizations that deal with cryptocurrency and enhances reporting requirements for brokers. It requires all digital asset transactions worth more than $10,000 be reported to the Internal Revenue Service (IRS). Several senators suggested an amendment to the bill to further clarify tax reporting obligations, but the proposal failed back in August.
Before the signing, a pair of US Senators introduced new legislation that seeks to curtail some of the infrastructure bill’s tax reporting rules. The proposal is a bipartisan effort between Senate Finance Committee Chairman Ron Wyden and Senator Cynthia Lummis. It is, however, uncertain when this law will be voted on, and the Senate may include it in other year-end legislative packages.
The uncertainty surrounding the effects of the infrastructure bill on cryptocurrency may be another possible reason for the market dip. The market may experience sideways movements until greater certainty returns.
Do you still expect an upward swing in Bitcoins prices? Let us know in the comments below.