The Bitcoin price succumbed to another bout of heavy liquidation, on fears over U.S Cryptocurrency regulations and capital gains tax-hikes.
Bitcoin is currently trading towards the session lows of $49,360, down a whopping 9.10% on the day. The recent revelation that the Biden administration is in talks with both the Securities and Exchange Commission (S.EC) and the Treasury Department to implement Cryptocurrency regulation, has done little to boost confidence in the struggling BTC/USD pair.
With the digital asset already facing some serious headwinds after last week’s 15% sell-off, the Bitcoin price stabilized in the $55,000-$57,000 range. The market initially looked likely to reclaim the 50-Day Moving average at $56,800. However, news that President Biden is seeking to almost double capital gains tax to 39.6% from 20% sent shockwaves across risk assets, resulting in continued profit-taking and heavy liquidation.
The technical outlook on Bitcoin continues to deteriorate. The market is now firmly established below the 50-day moving average which has proved a bastion of support in the recent run to the all-time-high of $64,000. On five occasions the bitcoin price tested the average without closing below until the recent rout.
Also, we note that the medium-term uptrend at $52,000, in place since the December 2020 lows of $17,500, has also been breached. This failure now puts the important 100-day moving average at $49,500 firmly in sight.
Traders should pay close attention to the market reaction at the key 100-day moving average. Support should be found initially at this level. However, a failure to hold could trigger another round of technical selling. Further liquidation could drive the bitcoin price back towards $45,000. If the market consolidates at this level, longs may provide good risk/reward with a stop below the moving average on a closing basis.
Bitcoin price chart
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