Bitcoin is struggling to make its way out of the $6,000 region, and it has not been able to test the $7,500 mark since its corrective rally on April 4. The entire cryptocurrency market including both major and minor cryptocurrencies has fallen over the past 48 hours.
Since its initial fall from $7,500 to $6,500, bitcoin has not been able to secure momentum to recover to the $7,000 region. Although momentum oscillators including Williams’ Percent Range and Relative Strength Index (RSI) show oversold conditions, the market has not shown any intention to lead a new rally towards the $7,800 mark, which traders have considered as a major test for bitcoin since late March.
The fall in the momentum of bitcoin has coincided with a flurry of negative news, including the decision of the Reserve Bank of India (RBI), the central bank of India, to ban banks involved with the RBI from dealing with cryptocurrencies. While this is not a ban on cryptocurrency trading or exchanges, it could make it more difficult for cryptocurrency exchanges to secure partners and banking services.
Contrary to many reports published this week, the decision of the RBI will not have a profound impact on the Indian cryptocurrency market, given that exchanges are still operating as self-regulated businesses. More importantly, the Indian government has still not offered a clear stance towards the cryptocurrency market, and the federal government’s policies could differ from that of its central bank.
Globally however, the Indian cryptocurrency exchange market has a small market share of the international bitcoin and cryptocurrency markets. Hence, it is unlikely that the announcement will have any major impact on the global bitcoin market.
Earlier this week, during an interview with CNBC, Wall Street analyst Tom Lee stated that cryptocurrency investors in the US owe as much as $25 billion to the Internal Revenue Service as gains tax. As such, Lee stated that it is likely the prices of cryptocurrencies could rebound after the tax season comes to an end, as CCN reported yesterday.
“April 15 marks the end of tax season in the United States, and it’s just around the corner. Investors who profited from bitcoin’s massive rally in December are having to come up with the money to pay Uncle Sam now, which could explain a percentage of the selling pressure in the bitcoin price in March,” CCN reported.
The end of the tax season along with rising demand from the public towards cryptocurrencies as noted by Augur co-founder Jeremy Gardner could lead to overall recovery from this bear cycle, which the cryptocurrency market has been struggling with since early January.
At the time of reporting, the current correction remains as the third worst correction in the history of the bitcoin market, at a 72 percent decline from its all-time high.