After clearing the key indicator on yesterday’s rally. The Bitcoin price is once again back at the crucial 200-day moving average.
After Wednesday’s cryptocurrency massacre, bulls were looking for a sign that the market had seen the worst of the liquidation.
The +42% reversal from the mid-week low of $30,000 gave them what they wanted. This was further reinforced as the rally took the Bitcoin price to $42,600 and well clear of the 200-Day MA at $40,073.
It seemed that it was business as usual for Bitcoin, which has a habit of bouncing back from adversity.
Treasury Cracks Down On BTC
However, the euphoria was short-lived, and the Bitcoin price is now back at $40,000. The rally faded on news that the U.S Treasury has introduced a $10,000 reporting limit on Bitcoin transactions.
The measures are part of a plan to clamp down on tax evasion using digital currencies. This comes as the POTUS tries to fill the hole left by the huge post-covid stimulus packages.
A slew of negative news flow has battered the Bitcoin price over the last two weeks. I don’t see the latest as a major bearish factor for BTC/USD.
It was always going to happen; FIAT currency transactions have reporting limits, so it was inevitable that crypto would follow suit.
However, the news comes at a time when the price is recovering from a historic sell-off. It takes a while for confidence to return in a market that has taken such a beating, and traders are likely to remain nervous for some time.
Until the price can manage to break clear in either direction, the market will remain polarized in its views.
Today’s price action may give us a much clearer idea of which path the Bitcoin price will follow over the next few weeks.
Bitcoin Price Daily Chart
Follow Elliott on Twitter.