Bitcoin gained 2.34% against the US dollar so far this week, advancing for the fourth consecutive week. Yesterday, the cryptocurrency gained 5.76% against the dollar, recovering its losses from the previous session and closing at the 46,293.0 level.
Many link the current situation in the market to the fact that there are now more crypto advocates in the United States government who are willing to oppose the crypto tax provision in Biden's infrastructure bill. More concretely, the infrastructure bill vote was recently delayed in order to allow for more time to debate two amendments to the cryptocurrency tax provision, which signals that those issues are being taken more seriously by lawmakers at Capitol Hill.
“There has been a surprisingly large pro-crypto stance taken in the course of this,” commented the head of a famous cryptocurrency exchange during an interview with CNBC. “It’s one of these things where, even if it loses in this particular amendment, a lot of senators have ended up taking crypto stances that never said anything before publicly. It’s showing there’s a much bigger presence in Washington of cryptocurrency interest than people expected going into that.”
Other analysts link this rally with the most recent stock market rally and the gold price correction, which signal growing risk appetite.
Bitcoin had been losing ground before because there were confusing signals regarding its status in the markets. On one hand, it had been getting institutional support from companies like Tesla, which adopted it as a medium of payment and even included it in its balance sheets. However, the company eventually backed down from their original decision, claiming that Bitcoin mining was detrimental to the environment.
On the other hand, adoption was being threatened by attempts to regulate and even ban the use of crypto alternatives. The most prominent case is China's, which banned the distribution and production of cryptocurrencies, perhaps as an attempt to snuff out potential competitors of the digital yuan.
Despite the rising risk appetite, the spread of the Delta variant is currently threatening economic recovery, as governments once again imposing restrictions on economic activities and social events. Rising raw material prices are also threatening recovery, as central banks may reconsider their loose monetary policy stances.
By 8:20 GMT, Bitcoin rose by 4.84% against the US dollar, hitting the 45,864.0 level.