Crypto Outlook: Fed in focus

Bitcoin’s price seems to have halted any bearish tendencies, corrected higher and stabilised in a zone over the past week. In this report, we aim to shed light on the possible factors aiding to the recent developments in combination with a technical analysis of Bitcoin.

Crypto: Overview Report

Bitcoin taxation discussed

After the announcement of the intentions of former US President Trump, if he returns to the White House, “If elected, it will be the policy of my administration to keep 100% of all the bitcoin the U.S. government currently holds or acquires into the future”, discussions in Washington about taxing or not Bitcoin transactions are heating up.

Currently the US is taxing capital gains from Bitcoin transactions, yet the discussion for a possible exemption is rising. The main reason is that the Tax as such, seems to encourage long term holding of the cryptocurrency and contradicts the original idea of using Bitcoins as a money alternative.

Coin Telegraph reports that this problem is one that members of Congress have been seeking to solve for a few years. As part of that effort, Lummis and Senators Ted Budd (R-NC), Kyrsten Sinema (I-AZ) and Kirsten Gillibrand (D-NY) introduced their proposal, the Virtual Currency Tax Fairness Act, to the 118th Congress in July.

As Coin Center’s Landon Zinda described it, “The bill creates a sensible de minimis exemption from capital gains tax for low-value cryptocurrency transactions in day-to-day use”.

Should such tendencies be enhanced among US lawmakers, we may see the market providing additional support for cryptocurrencies thus pushing Bitcoin’s price higher.

Apple to allow cryptocurrency transactions on iPhone

Crypto related media highlighted the news related to Apple’s announcement for it’s Apple Wallet. The company is to open its iPhone payment chip tot third party developers, which could enhance the use of crypto through tap-to-pay functions. The change in Apple’s stance may have been a result of regulatory pressure especially from the EU.

The EU Commission’s antitrust investigation alleged that Apple restricted rival mobile wallet developers. The shift in Apple’s stance and agreement to open up its NFC technology, allowed the company to bypass hefty fines which the EU Commission intended to impose.

Nevertheless, Apple will still charge “associated fees” and require commercial agreements, meaning that only developers who meet stringent security and regulatory standards will gain access.

Overall should such a development could allow for crypto transactions to be performed more seamlessly and thus could enhance the demand for cryptocurrencies, including Bitcoin and boost its price.

The Fed’s minutes and the Jackson Hole Symposium

On deeper fundamental level for the markets we highlight the Feds’ intentions as a factor that could also affect cryptocurrencies. The markets currently expect the Fed to start cutting rates in its next meeting in September and continue to deliver another rate cut in the November meeting and a double rate cut in the December meeting according currently to Fed Fund Futures.

Despite the market’s expectations may be over fetched its dovish expectations are very clear. On Wednesday we get the minutes of the Fed’s July meeting minutes. Should the document be characterised by a dovish tone thus verifying the market’s expectations it could provide support for riskier assets including cryptocurrencies.

On Friday we highlight the start of the Jackson Hole symposium and Fed Chairman Powell’s speech is expected to be closely watched by market participants for any clues regarding the bank’s intentions. As with the Fed’s meeting minutes, any dovish signals from the Fed

Chairman could support cryptocurrencies and vice versa, any comments implying a less dovish path on behalf of the bank could force the market to reposition itself adding selling pressure on the crypto market.

Crypto Technical Analysis

BTC/USD Daily Chart

• Support: 54500 (S1), 50400 (S2), 46700 (S3)
• Resistance: 59500 (R1), 64400 (R2), 69000 (R3)

BTC/USD edged lower today after proving unable to clearly breaking the 59500 (R1) resistance line. The crypto’s price seems to have stabilised somewhat between 56000 and 61700, after breaking on the 8th of August the downward trendline which guided the crypto’s price action since the 29th of July.

Hence we tend to maintain a bias for the sideways motion to continue. Yet on the other hand, the RSI indicator despite remaining close to the reading of 50, implying a rather indecisive market for the crypto’s future outlook.

It should be noted that the indicator was not able to break above it, which may imply that the bearish predisposition of the market may not have been totally erased yet, given also the 20 moving average’s downward slope.

Should the bears take over we may see the crypto’s price aiming if not breaching the 54500 (S1) support line and start aiming for the 50400 (S2) support level. On the flip side should the bulls take over, we may see Bitcoin’s price breaking the 59500 (R1) resistance line and start aiming for the 64400 (R2) resistance base.

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تحذير بشأن المخاطر:

Crypto CFDs are an extremely high-risk, speculative investment and you may lose all your invested capital. Before trading, you need to ensure you fully understand the risks involved taking into consideration your level of experience and investment objectives. Seek independent advice, if necessary.