The pair will likely keep falling as bears target the next key support at 37,000.
Sell the BTC/USD and add a take-profit at 37,000.
Add a stop-loss at 42,000.
Timeline: 1-2 days.
Set a buy-stop at 40,000 and add a take-profit at 42,000.
Add a stop-loss at 38,000.
The BTC/USD price retreated during the overnight session as investors reacted to the proposed crypto taxes in the US. The Bitcoin price declined from the weekend high of $42,640 to a low of $38,726.
Crypto Tax in the Infrastructure Bill
Investors are focused on the infrastructure week that happens this week. A bipartisan group of senators are attempting to reach a $1 trillion infrastructure bill that will see the country invest in roads and bridges. As part of the package, the politicians have proposed to raise $30 billion in taxes from cryptocurrency transactions.
They will achieve this by expanding the definition of a broker to include any person is responsible for providing a service that transfers digital assets on behalf of another person. This definition does not include other players in the industry like miners, node operators, and software developers. A major tax on crypto transactions would affect demand for the coins.
The BTC/USD pair also retreated as investors took profits after having a strong recovery in the past few weeks. For one, at its peak, the coin had jumped by more than $12,000 within less than two weeks. This performance was also driven by the relatively dovish Federal Reserve. In its decision last week, the bank decided to leave interest rates unchanged. It also decided to maintain its quantitative easing policy intact.
Therefore, the next key catalyst for the coin will be the latest US jobs numbers. On Wednesday, ADP will publish preliminary employment numbers that are expected to show that the economy added more than 800k jobs. The data will be followed by the official non-farm payrolls data that will come out on Friday.
These numbers are important because they have an impact on the overall policy of the Federal Reserve. Bitcoin thrives in a low-interest-rate environment.
The BTC/USD price rose to a high of 42,640, which was the highest level in more than a month. As it rose, it moved above the important resistance level at 41,246, which was the highest level on June 15. The price has formed an ascending channel pattern.
It has also moved below the 25-day and 15-day moving averages while the MACD has continued falling. Therefore, the pair will likely keep falling as bears target the next key support at 37,000. It will then rebound and move above this week’s high of 42,640 later this week.