Market Wrap: Cryptocurrency Sell-Off Stabilizes Amid US Tax Concerns

Bitcoin’s price declined about 5%, but later stabilized around $60K.

AccessTimeIconNov 16, 2021 at 9:25 p.m. UTC
Updated May 11, 2023 at 4:26 p.m. UTC

Cryptocurrencies were mostly lower on Tuesday as some traders reacted to the signing of the U.S. infrastructure bill containing a controversial crypto tax-reporting requirement.

The bill would require all crypto brokers to report transactions under the current tax code. Industry proponents worried the definition would be too broad, involving entities such as miners and other parties that don’t actually facilitate transactions, CoinDesk’s Nelson Wang reported.

“We’ve seen the U.S. infrastructure bill get signed, which has initiated a sell-off from traders who are concerned about regulation and taxation” for digital currencies, noted Hayden Hughes, CEO of crypto strategy platform Alpha Impact, in Seeking Alpha’s Tuesday newsletter.

Bitcoin’s price slid about 5% over the past 24 hours, although the price later stabilized around the $60,000 support level. Technical indicators suggest BTC is oversold, which could support a brief price bounce during Asian trading hours.

Latest prices

  • Bitcoin (BTC): 60,128.20, -5.96%
  • Ether (ETH): 4,234.64, -7.55%
  • S&P 500: 4,700.90, +0.39%
  • Gold: 1,850.62, -0.62%
  • 10-year Treasury yield closed at 1,637%

“Bitcoin’s sell-off has taken it back to levels last seen 10 days ago; hardly a plunge, more a correction of the multi-month rally,” Nicholas Cawley, an analyst at DailyFX, wrote in an email to CoinDesk.

If current support levels hold, Cawley expects BTC to eventually reach a new all-time high over the coming weeks.

‘Extreme greed’ tapers off

The bitcoin Fear & Greed Index is starting to fall from the highest level since September, suggesting that extreme optimism among market participants is starting to fade.

“After bitcoin’s crash today, the index will likely see a substantial fall, but this is common in bull markets and doesn’t necessarily imply that the show is over for now,” Arcane Research wrote in a Tuesday report.

Bitcoin’s pullback also triggered higher intraday volatility, which could mean buyers and sellers are uncertain about future price direction. BTC has traded in a range between $57,000 and $69,000 over the past week.

Bitcoin Fear & Greed Index (Arcane Research)
Bitcoin Fear & Greed Index (Arcane Research)

Crypto mildly overbought

“The crypto space has now become mildly overbought,” Santiago Espinosa, a strategist at MRB Partners, an investment research firm, said during an interview with CoinDesk. The chart below shows MRB’s cyclical momentum indicator, which has risen from oversold levels over the past month.

Espinosa said that risk-taking in cryptocurrencies has been heavily incentivized by extreme monetary and fiscal stimulus. This could mean cryptocurrencies have further room to rise and eventually reach extreme overbought levels.

For now, “I believe that until real interest rates become restrictive, the recent rally in this speculative space has legs,” Espinosa said.

Crypto momentum indicator (MRB Partners)
Crypto momentum indicator (MRB Partners)

Altcoin roundup

  • Voyager Digital launches USDC-linked debit card: Cryptocurrency platform Voyager Digital is launching a USDC-linked debit card, CoinDesk’s Michael Bellusci reported. The card will pay up to 9% in annual rewards on all USDC holdings of $100 or more, payable monthly to cardholders. It will also include no annual fees and lockup of assets to earn rewards and users can access their assets via ATMs.
  • Supply chain meets NFTs: MultiChain, one of the first blockchain platforms to explore ways enterprises could benefit from crypto tech, is adapting non-fungible tokens (NFT) to the needs of buttoned-up businesses, CoinDesk’s Ian Allison reported. Coin Sciences has integrated support for NFTs with the release of MultiChain 2.2. It’s not the only enterprise blockchain platform to have noticed the practicalities of using NFTs. IBM and Fabric have also been working on enterprise NFTs.
  • Brave browser launches built-in crypto wallets: Brave’s browser has a built-in crypto wallet thanks to an update on Tuesday, CoinDesk’s Danny Nelson reported. Adding a native wallet is an obvious play for crypto-conscious Brave Software, Inc., which says it has 42 million monthly active users. Brave Wallet, which is self-custodied – meaning wallet users hold their private keys – allows for token purchases through Wyre, tracks portfolio performance, swaps a wide range of tokens and stores non-fungible tokens.

Relevant news

Other markets

All major digital assets in the CoinDesk 20 ended the day lower.

Notable losers as of 21:00 UTC (4:00 p.m. ET):

  • Litecoin (LTC): -12.54%
  • Algorand (ALGO): -11.89%
  • The Graph (GRT): -11.21%


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Damanick Dantes

Damanick was a crypto market analyst at CoinDesk where he wrote the daily Market Wrap and provided technical analysis. He is a Chartered Market Technician designation holder and member of the CMT Association. Damanick is also a portfolio strategist and does not invest in digital assets.

Helene Braun

Helene is a New York-based reporter covering Wall Street, the rise of the spot bitcoin ETFs and crypto exchanges. She is also the co-host of CoinDesk's Markets Daily show. Helene is a graduate of New York University's business and economic reporting program and has appeared on CBS News, YahooFinance and Nasdaq TradeTalks. She holds BTC and ETH.