Bitcoin breaches $50,000 threshold in downfall

24 April, 2021
Bitcoin breaches $50,000 threshold in downfall
Bitcoin headed because of its worst week in almost 8 weeks on Friday as a proposed capital-gains tax increase for wealthy Americans intensified the volatility whiplashing the world’s largest cryptocurrency.

A fresh bout of selling on Friday drove Bitcoin down just as much as 7.9 % to $47,525 - below its 100-day moving average - since it continued to obtain key technical levels.

Wall Street analysts say further losses are easy for the notoriously volatile currency that hit a record most of $64,870 on April 14 before Coinbase Global Inc’s listing, though after that it succumbed to an unexplained weekend swoon.

This week’s roughly 20 % rout marks the worst period for Bitcoin because it tumbled amid a wider slump in risk assets at the end of February.

Even digital currencies that have were able to eke out gains in the last couple of days, like Ether and the satirical Dogecoin, tumbled on Friday as the crypto space converted into a sea of red.

“Bitcoin has slipped below the 50-day moving average support that it held sacrosanct through this rally,” said Pankaj Balani, leader of Delta Exchange. “It appears like there is more downside here.”

The latest threat comes from a Bloomberg News report Thursday that the Biden administration is considering raising the tax on capital gains to 39.6 per cent for those earning a lot more than $1 million a year. That was enough to ignite the biggest slide in US stocks in five weeks.

US investors in Bitcoin, which has advanced a lot more than 70 per cent this year despite its recent pullback, already face a capital-gains tax if they sell the cryptocurrency after holding it for more than a year.

But the coin’s been among the best-performing assets in recent years - anyone who bought this past year is sitting on a nearly 550 % gain. For investors who bought in April 2019, it’s roughly 800 %.

To be certain, the proposal must wind its way through Congress and even if it’s passed, investors don’t yet know when it would go into effect, said Simon Peters, cryptoasset analyst at multi-asset investment platform eToro.

But “we are evidently seeing some selling pressure,” said Mr Peters. “It has coincided with the crypto market arguably looking quite frothy after a crank up in purchases - and prices - lately, with this announcement acting as a catalyst for a deeper retracement.”

The Internal Revenue Service has stepped up enforcement of tax collection on crypto sales. The agency - which commenced asking crypto users to disclose transactions on the 2019 individual taxation statements - asks taxpayers if they “received, sold, sent, exchanged or elsewhere acquired any financial interest in virtually any digital currency".

Bitcoin broke below its 100-day moving average earlier Friday.

For most chartists, its next support level is just about its 150-day line, accompanied by its longer-term 200-day one around $34,520. But, some could possibly be heartened by the fact that its relative strength indicator is nearing an oversold level (it’s currently at 30.5), meaning that Bitcoin could see a reprieve from the selling.

Carter Worth at Cornerstone Macro said his analysis points to Bitcoin falling to $40,000. That can happen if it breaks below the trend line that’s been in effect the past six months. The particular level corresponds to Bitcoin’s 150-day moving average and has showed significance in this year’s trading - it posed resistance in January and will be offering support in late February.

Still, investors might need to buckle up for more volatility soon.

“People have been discussing the capital-gains tax and US stock-market sell-off being the catalyst of the,” said Todd Morakis, co-founder of digital-finance product and service agency JST Capital. “If it's true, we’ve moved an excessive amount of - but once Bitcoin gets a head of steam, it really is tough to stop unless you are at a technical area.”
Source: www.thenationalnews.com
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