David Puell, a chain analyst and founder of Puell Multiple, believes there are two things that can make Bitcoin (BTC) see a temporary peak in this cycle.

The analyst noted that the US government is likely to tax unrealized gains, and that the potential approval of the Bitcoin Trading Fund (ETF) could reduce the growth of BTC.

Why can the ETF have a negative impact on Bitcoin’s short-term price cycle?
The potential effect of the US government taxation of unrealized profits on the Bitcoin price is clear.

At the end of each tax cycle, Bitcoin may face an increased level of pressure from sellers, which reduces momentum.

But the possibility that the Bitcoin ETF will negatively affect the Bitcoin price is a relatively new concept.

Pwell explains that the arbitration game with the Grayscale Bitcoin Trust Awards has been an important catalyst for BTC’s growth recently.

ETF approval could reduce the capital flows of the Grayscale Bitcoin Trust, which is said to reduce the demand for bitcoin on paper. Boyle said:

“BTC: IMO, there are two affordable news that indicate the peak cycle of bitcoin … 1. Unrealized tax gains in the US: sales pressure on the annual chart. 2. ETF approval encourages GBTC to trade at a discount, which reveals On the main tower running this ascent. ”
It is unlikely that these two incidents will occur in the near future. Boyle stressed that if that happened, it would be most bearish for Bitcoin. This is to explain:

“Important note: I’m not saying it will happen tomorrow, but if it does, it will mainly be bearish. Bitcoin must overcome these obstacles to continue on its long-term journey. I care about them.”
Traders are also skeptical of BTC, unless BTC exceeds $ 35,000.
However, Bitcoin has a good chance of breaking the $ 35,000 resistance level in the short term. On January 25, the price rose to $ 34,880, indicating strong overnight rally dynamics.

But Bitcoin has struggled to break out of the critical level of $ 35,000, and it fell below $ 32,000 on January 26.

Loma, a borrowed cryptocurrency trader, said that failing to cross $ 35,000 could make altcoins more attractive, especially if BTC’s momentum is exhausted. It is without:

“Higher than $ 35,000, or when bitcoins reach $ 26 to 27,000, this avi changes and we get endless bullish hype. Until then, if you do not scalp, things look terrible. The thirst for EVERYTHING continues to quit. Week with a short the position of BTC $ as a hedge in force. ”
According to a Cointelegraph report, the weakness of Bitcoin in the last two weeks has led to a break in the ETH / BTC pair. Major cryptocurrencies, including Ether and DeFi tokens, performed particularly well against BTC this year.

Bitcoin and Ether since the beginning of the year. Source: Data on digital assets.
If Bitcoin continues to consolidate below $ 35,000 for now, altcoins will be well positioned to catch up, especially in their BTC pairs, in the first quarter of 2021.

Source: CoinTelegraph