Institutional tax-loss harvesting weighs on the Bitcoin price as 2021 comes to a close
The US Federal Reserve has begun to investigate the possible tax-loss harvesting by institutional investors in Bitcoin. This news will affect the price of Bitcoin throughout 2019 as volatility increases.
The “bitcoin scandal 2021” is a story that has been in the news for quite some time. The institutional tax-loss harvesting is weighing on the Bitcoin price.
Despite year-end problems that have kept the price of Bitcoin (BTC) stuck below $48,000, much to the displeasure of many who had been advocating for a $100,000 BTC moonshot, 2021 has been a breakthrough year for the cryptocurrency sector as a whole.
According to data from Cointelegraph Markets Pro and TradingView, the top cryptocurrency has had a rollercoaster 24 hours after a small plunge below $46,000 in early trading hours on Dec. 30 was swiftly scooped up, pushing the BTC price back over $47,500 by noon.
4-hour chart of BTC/USDT. TradingView is the source of this information.
Here’s what a few market experts had to say about Bitcoin’s year-end price movement and what to anticipate in 2022 as the broad use of blockchain technology and cryptocurrencies progresses.
Support replaces major resistance.
Market analyst and anonymous Twitter user Rekt Capital examined Bitcoin price activity on the monthly chart, posting the graphic below that shows how BTC has switched a big resistance zone into support:
1 week chart of BTC/USD. Twitter is the source of this information.
“BTC has changed the February, August, and September resistance into new support this month,” according to Rekt Capital, who is waiting for a monthly candle close above the green zone in the chart above to establish this as a new support level.
In terms of levels to monitor in the coming days, Rekt Capital is keeping an eye on the $48,500 price level as a barometer of BTC’s overall strength. According to the analyst:
“If BTC can retake $48500 as support by the end of the week, BTC might revisit the $52000 barrier once again.”
BTC’s largest short-term obstacle is $52,000.
David Lifchitz, managing partner and chief investment officer of ExoAlpha, provided insight into Bitcoin’s year-end slump, pointing the blame at institutional investors who look to be “selling for tax reasons with a T+3 settlement… to settle on 12/31.”
According to Lifchitz, the market’s recent volatility is attributable in large part to a lack of liquidity. He predicted that “BTC will be back up to $50,000 in the next couple of days… as well as down to $46,000” in the coming days.
Lifchitz suggested that “the next stop could be ultimately down to $30,000” if bears manage to break below support at $46,000 and complete the large head and shoulder pattern forming on the BTC chart, but added that “we’re still far from that and too obvious technical patterns tend to not complete as expected.”
In terms of potential upside, Lifchitz identified $52,000 as “the key obstacle that BTC has already failed twice.” He went on to say that
“If that barrier is broken, the next upside stops are the $60,000 area and then the $70,000 ATH.”
Lifchitz issued one last word of warning about the planned Mt. Gox distribution of 146,000 BTC in the first half of 2022, which he views as having the “potential to rearrange the cards big time,” according to the chief information officer.
The proposal to rehabilitate Mt. Gox is now ‘final and binding.’
There’s no reason to be concerned.
Devchart, a crypto trader and pseudonymous Twitter account, offered reassuring remarks to traders concerned about Bitcoin’s recent drop below $46,000. He sent the chart below, which shows that Bitcoin has been trading in a narrow range for the most of December:
4-hour chart of BTC/USDT. Twitter is the source of this information.
“If you zoom out, you’ll notice that we’ve just returned to the bottom of the same range we’ve been fluctuating in since December 3rd. There’s no reason to get worked up until we get out of this range.”
Markets expert and Cointelegraph writer Michal van de Poppe had a similar forecast, predicting that the market will see some short-term dip before eventually rising.
Markets have been a little dull recently. For #Bitcoin, it’s just a case of bottoming out.
We’ve retested $46K as support and rebounded, but we may need to take liquidity below the lows before we can make another upward move.
December 30, 2021 — Michaal van de Poppe (@CryptoMichNL)
The total value of all cryptocurrencies is currently $2.237 trillion, with Bitcoin commanding 40.4 percent of the market.
The author’s thoughts and opinions are completely his or her own and do not necessarily represent those of Cointelegraph.com. Every investing and trading choice has risk, so do your homework before making a decision.
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The “bitcoin price history” is a tool that can be used to track the Bitcoin price. The cryptocurrency has been struggling with institutional tax-loss harvesting, which weighs on the Bitcoin price as 2021 comes to a close.