Bitcoin rallied to three-month high as crypto compromise amendment blocked in Senate

Bitcoin rallied to three-month high as crypto compromise amendment blocked in Senate

Bitcoin surged to its highest level in nearly three months after United States senators reached a last-minute compromise over a provision in the $550bn infrastructure bill that addresses how to tax crypto assets.

The largest digital coin rose as much as 5.4% to reach $46,245 during New York-trading hours. The rally is a continuation of recent momentum — the coin is up roughly 17% over the past week.

Bitcoin traded as high as $46,465. That marks its highest level since May 16, when it hit $49,770.33, according to Coin Metrics. The price of ether also broke through $3,000 over the weekend for the first time since May and continued to hover above it at $3,100 Monday.

Peer coins also benefited, with Dash, Ether and Litecoin, among others, each up at least 5%. The Bloomberg Galaxy Crypto Index of larger digital assets rose 8.1% at one point, also its highest since May.

The rally comes as the Senate further delayed the vote on the infrastructure bill to Tuesday to allow for more time to debate two competing amendments to a cryptocurrency tax provision, which was initially included in the bill as a pay-for to help the government raise some $28 billion for the infrastructure spending. 

The senators behind the competing amendments offered a compromise amendment late Monday morning crafted with the Treasury Department, Sen. Pat Toomey, R-Pa., said in a press conference Monday.

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.

Having corrected more than 50% and formed solid bases of support within a potentially longer-term bull market. Post-halving years have historically seen great appreciation, and the original cryptocurrency could reach $100,000.

Damon Harrison
Market Analyst, IPG Group