Bitcoin, Ethereum, Dogecoin Drop On Report Of Biden's Crypto Tax Tweaks: Analyst Urges Focus On 'Red Candles' Amid Major FOMO

Major coins traded in the red on Wednesday evening following reports of President Joe Biden proposing changes to cryptocurrency taxation in an upcoming budget plan.

What Happened: Apex cryptocurrency Bitcoin BTC/USD inched down to its lowest level in more than three weeks, trading at around $21,700. As investors grapple with economically worrying jobs and price data, Federal Reserve Governor Jerome Powell rekindled his stance towards an expansive monetary policy to counter inflationary pressures. 

Ethereum ETH/USD fared similarly to Bitcoin and was also down about 1.93% to change hands just above $1,530. Dogecoin DOGE/USD was trading at $0.071, down 3.48% in the last 24 hours.

At the time of writing, the global crypto market capitalization stood at $996 billion, a decrease of 2.22% over the last day.

U.S. equities picked up on Wednesday as investors attempted to recover from the previous day's losses sparked by Powell's suggestion that interest rates may remain elevated for an extended period. The S&P 500 climbed 0.14%, while the Nasdaq Composite rose 0.4%, indicating a greater appetite for risk from traders.

See More: Best Crypto Day Trading Strategies

News Highlights: According to the Wall Street Journal, the new crypto tax policy proposed by Biden is projected to raise an estimated $24 billion and is part of his 2024 budget plan to reduce federal budget deficits by $3 trillion over the course of a decade.

Silvergate Capital Corporation SI, the holding company for Silvergate Bank, announced on Wednesday its decision to immediately wind down the bank’s operations and voluntarily liquidate the bank.

According to a report from CoinDesk, crypto exchange Gemini has lost a major partner — banking giant JPMorgan. The report cites a person familiar with the matter who was unable to provide further details about the decision.

Analyst Notes: “Bitcoin continues to waver around a three-week low as Wall Street tries to get a handle on what the Fed’s rate hiking campaign will do to the economy. The news across the cryptoverse is not spurring any reasons to buy this dip,” said Edward Moya, senior market analyst at OANDA.    

Michael van de Poppe, founder and CEO of trading firm Eight, observed that short-term holders' average purchase price for Bitcoin has crossed above the average purchase price for Bitcoin, suggesting that "people are FOMOing (fear of missing out) into the markets" as well as "a dip in the market." To capitalize on this opportunity, Van de Poppe said investors should pay attention to “red candles” and use them as opportunities to buy instead of green ones.

Short-term holders avg. purchase price crossed above #Bitcoin avg. purchase price.

It says two things;

- People FOMO into the markets.
- This is a dip after which markets continue to $35-40K.

Unless most, use red candles to buy instead of green ones.

c/ @therationalroot pic.twitter.com/eMV6ng9y3p

— Michaël van de Poppe (@CryptoMichNL) March 8, 2023

Santiment said prices remain difficult to predict during increasing rumors of another big impending Fed rate hike. 

Prices remain difficult to predict during increasing rumors of another big impending #Fed rate hike. Our latest community member insight discusses some of the key metrics to be conscious of, keeping in mind the "buy fear, sell euphoria" concept. https://t.co/zrXoPhIstQ pic.twitter.com/lVBOwcAH9A

— Santiment (@santimentfeed) March 8, 2023

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