Although the Bitcoin (BTC) price climbed above $40,000 on Thursday, the rally ended as traders wanted to profit from short-term trades.
The largest cryptocurrency fell 12.08 percent after climbing as high as $40,440 on the Coinbase exchange. At the time of this writing, Bitcoin price was trading around $35,988.
Regulations at hand
Rumors about the future of strict regulations that will affect the cryptocurrency market have hampered the recovery process in the Bitcoin price.
Looking back, the BTC/USD pair dropped to as low as $30,000 on May 19 after the news that China banned crypto transactions.
In the same week, the administration of US President Joe Biden put further downward pressure on Bitcoin and similar digital assets by mandating that transactions over $10,000 be reported to the Internal Revenue Service.
So in a time period of 2 weeks @elonmusk @Snowden @china and @POTUS all have a huge influence on #Bitcoin. The environment, security and taxes… Huge drop in value after every message.. Is that a simple coincidence? Or is that a smart plan? Either wat, is opportunity knocking!!
— Nicky (@NickyThissen) May 24, 2021
Meanwhile, high inflation concerns prevented Bitcoin from seeing deeper correction. The latest inflation report in the USA helped the Federal Reserve’s expectations of 2.2 percent to rise to around 4.2 percent.
Normally, this situation would have paved the way for the US central bank to reduce its current expansion policies, but officials agree that the process is “temporary” due to the nature of inflationary rises.
There are mixed signals in the technical data on the Bitcoin market. Bitcoin price moves between the temporary support at $35,000 and the temporary resistance at $40,000.
The fire of ascension must be fanned
ARK Investment CEO, Cathie Wood, has made statements that will allay fears of tighter control over Bitcoin assets.
Speaking at the Consensus 2021 conference earlier this week, the famous tech investor stated that cryptocurrencies are impossible to unplug.
“I think the competition in the rest of the world has helped us in the US. I think it was good,” Wood said in an interview last week.
Regarding the decline in institutional investment in cryptocurrencies, Wood noted that investors turned to alternative assets after negative Bitcoin news about the environment. The same issue was raised when Elon Musk decided to stop receiving Bitcoin payments for Tesla’s electric vehicles.
However, the billionaire entrepreneur later supported the formation of North American cryptocurrency miners to monitor and reduce crypto-related carbon emissions.
“Half the solution: understanding the problem,” Wood said in his Consensus conference speech.
“Certainly having miners in North America monitor how much of their electricity use is generated by renewable sources will put those concerned at ease. It will accelerate the adoption of renewable energy methods.”
He argued that institutional investments will increase with the transformation of the Bitcoin production profile to green energy.
Wood’s ARK firm raised Coinbase shares (COIN) last week. It purchased 223,181 shares to increase its investment to over $1 billion.
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