Bitcoin Experiences Decline to $105K Amid Crypto Tax Setbacks

XRP Faces Challenges Amid Legal Issues

In recent trading sessions, XRP has seen a downturn, largely influenced by ongoing legal uncertainties. Meanwhile, Bitcoin (BTC) has also faced pressure, continuing its downward trend that began on June 30. This decline follows investor reactions to the passage of the One Big Beautiful Bill Act (OBBB) on July 1, which dashed hopes for amendments to crypto taxation, including potential capital gains exemptions.

Senator Cynthia Lummis had previously expressed intentions to reform the current tax structure affecting crypto miners and stakers. She stated, “For years, miners and stakers have been taxed TWICE. Once when they receive block rewards, and again when they sell it. It’s time to stop this unfair tax treatment and ensure America is the world’s Bitcoin and Crypto Superpower.”

US BTC-Spot ETF Market Experiences Significant Outflows

The lack of amendments to crypto tax regulations, coupled with Federal Reserve Chair Jerome Powell’s cautious approach to monetary policy, has influenced the flow trends in the US BTC-spot ETF market. On July 1, Powell refrained from committing to a specific timeline for a rate cut, indicating, “Not going to rule in or rule out any particular meeting. Officials will be monitoring, particularly, what does show up in terms of inflation or what does not show up.” He expressed concerns that tariffs could exacerbate inflationary pressures.

According to Farside Investors, key flow trends on July 1 included:

• Fidelity Wise Origin Bitcoin Fund (FBTC) recorded net outflows totaling $172.7 million.
• Grayscale Bitcoin Trust (GBTC) experienced net outflows of $119.5 million.
• ARK 21Shares Bitcoin ETF (ARKB) saw net outflows amounting to $27 million.
• Bitwise Bitcoin ETF (BITB) reported net outflows of $23 million.

With pending flow data from BlackRock’s iShares Bitcoin Trust (IBIT), total outflows from US BTC-spot ETFs reached $342.2 million, marking the end of a sixteen-day inflow streak.

BTC Price Forecast: Influences from Trade, Economic Data, and ETF Trends

On July 1, Bitcoin’s price fell by 1.33%, following a previous decline of 1.09%, closing at $105,743. The short-term price outlook for Bitcoin hinges on several critical factors, including US economic indicators, guidance from the Federal Reserve regarding monetary policy, legislative developments, trade news, and ETF flow trends.

Potential Market Scenarios

• Bearish Scenario: A combination of easing global trade tensions, legislative hurdles, hawkish signals from the Federal Reserve, disappointing US economic data, and ETF outflows could push Bitcoin towards the 50-day Exponential Moving Average (EMA), potentially testing the $100,000 mark.

• Bullish Scenario: Conversely, renewed trade tensions, bipartisan support for crypto legislation, dovish comments from the Federal Reserve, robust US economic data, and inflows into ETFs could enable Bitcoin to aim for its previous all-time high of $111,917.

In summary, the current landscape for Bitcoin and XRP is shaped by a mix of regulatory uncertainties, market sentiment, and economic indicators, making the upcoming weeks crucial for investors.

Disclaimer: This article is provided for informational purposes only and does not constitute financial advice. Readers are encouraged to conduct their own research before making any investment decisions.