Bitcoin surged Monday to a three-month high while policy makers seek to hash out last-minute compromises over how to tax crypto assets.
The largest digital coin rose as much as 5 per cent to reach $46,060 during New York-trading hours. The rally is a continuation of recent momentum - the coin is up roughly 17 per cent over the last week.
Peer coins also benefited, with Dash, Ether and Litecoin, among others, each up at least 3 per cent. The Bloomberg Galaxy Crypto Index of larger digital assets rose 6.7 per cent at one point, also its highest since May.
“This move should be telling us that the worst is behind us for now,” said Matt Maley, chief market strategist for Miller Tabak + Co. Unless it reverses the move immediately, it could quickly advance toward $50,000, where it could find some resistance. Still, “the action in very bullish on a technical basis,” he said.
The rally comes as policy makers in Congress battle over how to word a section of the infrastructure bill that would impose new tax rules for cryptocurrencies. Under discussion is language that could refine the definition of crypto brokers required to report transactions and which could exempt some entities from the reporting rules.
Meanwhile, traders are watching Bitcoin's charts for clues as to where it could go next. The coin's 14-day Relative Strength Index (RSI) shows it's overbought, though it breached its 200-day moving average line amid the rally. The coin could still find resistance there -- as it did in May -- though a sustained position above it would be considered a bullish development. Many are eyeing $50,000 as the next key threshold.
“Bitcoin has found its groove once more over the last week,” wrote Craig Erlam, a senior market analyst at OANDA Europe. “Now very much back into bullish territory, the question is how far it can go this time around.”
Having corrected more than 50 per cent and formed solid bases of support within a potentially longer-term bull market, the odds are tilted in Bitcoin's - and Ether's - favor toward resuming its upward trajectory, wrote Bloomberg Intelligence's Mike McGlone in a note. Post-halving years have historically seen great appreciation, he said, and the original cryptocurrency could reach $100,000.
“A question is whether supply-and-demand conditions have deteriorated since the start of 2021 and compared with Bitcoin's past,” McGlone wrote. “Our take is that underpinnings are bullish in a maturing environment.”