Two Factors Could Cause Bitcoin To Peak, Says One Chain Analyst
Noted Bitcoin analyst David Puell says there are two things that could cause Bitcoin to peak in the future. David Puell, an on-chain analyst and creator of Puell Multiple, believes that two things could cause Bitcoin (BTC) to see a temporary ceiling in this cycle.
The analyst noted that the US government could tax unrealized gains and the possible approval of a Bitcoin exchange-traded fund (ETF) could cause BTC’s momentum to wane.
Why would an ETF have a negative short-term impact on the Bitcoin price cycle?
The potential impact of the US government imposing taxes on unrealized gains on the price of Bitcoin is quite clear. At the end of each tax cycle, Bitcoin could experience a higher level of selling pressure, causing its momentum to wane. But the prospect that a Bitcoin ETF could have a negative effect on the price of Bitcoin is a relatively new concept.
Puell explains that the arbitrage game of leveraging the Grayscale Bitcoin Trust premium has been a major catalyst for the recent rally in BTC.
The approval of an ETF could slow down the inflow of capital into the Grayscale Bitcoin Trust, which could then ostensibly reduce the demand for paper Bitcoin. Puell said: “BTC: In my opinion, there are two plausible pieces of news that would signal an upper cycle for Bitcoin… 1. US taxes on unrealized gains: selling pressure on an annualized calendar. 2. ETF approval, which encourages GBTC to trade at a discount, unraveling the main stock market move that drives this bullish. “
These two events are unlikely to occur in the near future. However, Puell emphasized that if they do happen, they would be fundamentally bearish for Bitcoin. He explained: “Important note: I’m not saying they will happen tomorrow, but they are fundamentally bearish if they did happen. Bitcoin would have to overcome these obstacles to continue on its long-term path. I’m attentive. “
Traders are also cautious with BTC unless it exceeds $ 35,000
However, Bitcoin has a good chance of breaking above the $ 35,000 resistance level in the near term. It rose to a high of $ 34,880 on Jan 25, showing strong momentum on an overnight rally. But Bitcoin has struggled to break out of the critical $ 35,000 level, retreating below $ 32,000 on January 26.
Loma, a cryptocurrency trader, said that not exceeding $ 35,000 could make altcoins more attractive, especially if the momentum of BTC slows down. He noticed:
“Above $ 35k or when $ BTC touches 26-27k, this avi changes and we get infinite bullish propaganda. Until then though, unless you’re scalping things are looking pretty bad. Longing for ALT towards the end of the week with short $ BTC as a hedge is still the game. “
As Cointelegraph reported, Bitcoin’s weakness over the past two weeks has led to the ETH / BTC pair breaking out. Large-cap altcoins, including Ether and DeFi tokens, have performed particularly well against BTC so far this year.
If Bitcoin continues to consolidate below $ 35,000, altcoins will be in a good position to catch up in value, particularly in their respective BTC pairs, in the first quarter of 2021.
Disclaimer: This press release is for informational purposes information does not constitute investment advice or an offer to invest. The views expressed in this article are those of the author and do not necessarily represent the views of infocoin, and should not be attributed to, Infocoin.