Cryptocurrencies rallied across the board on Monday while the US dollar edged higher and U.S. equities climbed to a record high as investors seemed to cheer on an outlook for a likely divided Congress in the wake of President Biden’s forthcoming proposal to double capital gains taxes for the highest-income Americans.
The positive outlook is also backed by the expectation that the Federal Reserve will remain accommodative in the face of the world’s largest economy recovering rapidly back to pre-pandemic levels. Investors will watch corporate earnings and U.S. economic data this week to see whether the actual bottomlines justify high valuations in the private sector.
Risky assets have been in favor in the past 24 hours after Asian bargain hunters substantially increased crypto trading activity in Monday morning.
Bitcoin (BTC) is consolidating near US $54,000 after pushing above the first resistance level and appears to be building momentum towards US $55,000 which can open the way even higher levels this week. There are chances of a fresh increase above US $55,000 if it manages to clear the major resistance level at US $54,0000. US $52,000 remains a key support level if the trend turns down.
Ethereum (ETC) has soared above $2,500 while ripple (XRP) showed a surprise surge to above US $1.42 from yesterday’s US $1.11.
Among the other variable-priced digital currencies in the Big Cap 10, Binance Coin (BNB) US $532, cardano (ADA) near US $1.24, Dogecoin (DOGE) US $0.26, ChainLink (Link) US $35, Stellar (XLM) $0.5, Litecoin (LTC) US $245 and Vechain (VET) US $0.19.
Dogecoin (DOGE) is the only one significantly under-performing in the past 48 hours.
President Joe Biden is set to give his first big speech to Congress on Wednesday night and is expected to elaborate on his proposal to sharply higher taxes on wealthy Americans who he has argued in last year’s election campaign can pay for social programs such as child care, universal pre-K, tuition-free community college and paid family leave.
White House economic adviser Brian Deese said at a press briefing the proposal is supported by research which has found no evidence that a hike in capital gains rates would affect long-term investment in the economy.
Although the cryptocurrency rally was a relief for digital coin holders, investors can sometimes misinterpret bear market rallies as markers of the end of a bear market, and so such rallies must be treated with caution. Bear market rallies happen, when in the backdrop of intact long-term bearish outlook, assets suddenly appreciate by over 10-20% over days and weeks before heading back down to new lows. In this regard, technical analysis still indicates bearish trend for the coming weeks.
Risk Warning: Cryptocurrency is a unregulated virtual notoriously volatile asset with a high level of risk. Any news, opinions, research, data, or other information contained within this website is provided for news reporting purposes as general market commentary and does not constitute investment or trading advice.