Bitcoin price prediction for August: buy the dip?

The Bitcoin (BTC/USD) price retreated to the lowest level since Tuesday last week as investors took profit after a strong 45% rally. There are also concerns about higher crypto taxes in the upcoming infrastructure package in the United States.

Bitcoin rally fizzles

The BTC price crashed to below $30,000 two weeks as investors worried about the rising Covid-19 cases in many countries like the US and Australia. The price then staged a remarkable recovery that saw it jump to the important resistance of more than $42,000 on Sunday. 

The rally happened as US bond yields and inflation expectations declined. At the same time, last week’s dovish Federal Reserve meeting helped fuel cryptocurrencies and stocks. 

The price retreated today as investors who bought the dip took profit. Also, there are concerns that the US will add more taxes to cryptocurrency transactions.

According to Axios, the $1 trillion infrastructure package being debated in Senate contains rules that will tax traders when they buy and sell digital assets. The aim is to raise more than $30 billion from these taxes.

While investors are worried about the new taxes, there are signs that the situation is being overrated. In an article, Forbes said that the bill will only make it easier for people to identify and pay their cryptocurrency taxes. Sponsors of the bill have also said that it will be tax neutral, meaning that they don’t propose any tax increases.

Looking ahead, there are some catalysts for Bitcoin prices. For one, on-chain data shows that many large investors are still buying or holding into their Bitcoin assets. For example, SpaceX, Tesla, and MicroStrategy have not exited Bitcoin even as its price declined.

The next key catalyst for the coin is the upcoming US non-farm payrolls data. The numbers will provide more information about the state of the American economy. Weak numbers will help to reinforce the Fed’s dovish view of the economy.

Bitcoin price prediction

The daily chart shows that the BTC price has declined in the past four straight days. This decline happened when the price rose to the important resistance at $41,246. It is not uncommon for asset prices to retreat after hitting a key level of resistance. At the same time, the 50-day and 25-day moving averages (MA) have made a bullish crossover pattern. Therefore, I suspect that the pair will keep rising as bulls target the next key resistance level at $45,000.