After trading near to $1,200 for weeks, Bitcoin to USD price has reversed back to below $1,050 during weekend trading on the back of high volume and, presumably, fears about the future of the cryptocurrency. And judging from the current market signals, the price is bound to take another hit if selling trends continue in the upcoming days
News of PBOC’ ID checks in China aside, the reasons why the price took a step back from growing and fell down to the current levels is, according to reports, due to the possible split of Bitcoin into two separate currencies, or the Bitcoin “hard fork”, if you will.
Like we talked about in our recent update, a host of high-profile mining pools are prepping up for the Blockchain update known as Bitcoin Unlimited, which could lead to a split of the cryptocurrency into two separate assets. Increasing the scalability of Bitcoin has been the subject of fierce debates in the developer world, and if it goes through, it will likely have a bigger effect on the price than the ETF approval did.
Buyer Pressure Forms
In the past two days since our last update, the price of Bitcoin has changed significantly, suffering a drop of over $100 during the weekend. The biggest change came on Saturday, when the price of 1BTC dropped down to $951.64, but has since recovered back above the $1,000 mark.
The price corrections were accompanied by an extremely high trading volume, which went as far as being close to $900million, which is likely the first time in Bitcoin history. However, current volume levels are far smaller, or $355,692,000, while the market cap is at $16.9 billion, which gives less room for any big surprises.
Our technical analysis shows that long-term indicators are pro-sell, with 9 out of 12 moving averages and 5 oscillators already in the sell-zone. The SMA 100 has dropped below the SMA 200 on this time-frame, also hinting at a further trend downwards.
However, short-term signals show a buying pressure forming, which if persistent, could keep further losses at bay. Thus, for now, the price seems to be looking for support at $1,050, with any break of the +/-$50 range likely to lead to a further correction in the said direction.
IRS Shares Data after Coinbase Lawsuit
In other interesting news, new data was shared by the IRS for the first time since the US revenue service began its probe into Coinbase – the largest US BTC exchange. Accord to findings, only a small number of Bitcoin owners have reported any annual profits or losses to the IRS, out of more than a million user accounts.
The data comes after a year-long battle between the IRS and Coinbase, which with the revenue service filling a sweeping summon to Coinbase, on the grounds of tax evasion suspicions. Coinbase is still opposing the decision, despite a pending federal lawsuit to enforce the data, but findings from the Modernized Tax Return Database (MTRDB) show the IRS have strong grounds to justify their probe.
According to MTRDB data, less than 1,000 people filed a 8949 report for capital gains and losses with the IRS during the 2013-2015 period, when Bitcoin’s price skyrocketed. Or more precisely, the numbers of 8949 reports filed were 807, 893, and 802 during 2013, 2014, and 2015, respectively, which, even if you subtract the non-US users and those who haven’t had any transactions, is still a small number compared to Coinbase’s traffic. However, it remains to be seen whether this will be enough to convince the federal court.