Bitcoin and Ethereum prices rise after US debt ceiling agreement

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Bitcoin rallied as legislation aimed at tackling the US debt ceiling and averting a potential default could eliminate a proposed tax on the energy consumption of cryptocurrency miners. Photo: Anna Rose Layden/Getty

Bitcoin (BTC-USD) approached the $28,000 mark on Tuesday, rallying on news that a proposed 30% tax on crypto mining in the US could be shelved as part of a deal bipartisan on the debt ceiling.

Bitcoin was trading at $27,810 (22,175) on Tuesday, up 1.8%.

The global cryptocurrency market capitalization stood at $1.21 billion, down 0.5%, according to data from Coingecko.

Since November 2022, bitcoin reserves on cryptocurrency exchanges have steadily declined, suggesting a drying up of supply.

Read more: Live crypto prices

Analysts who buy into the four-year cycle theory suggest this is part of the buildup period before the halving for bitcoin and the crypto market.

Ethereum (ETH-USD) settled at 1,902, up 2.5%.

Ethereum balances on exchanges also fell to 17.8 million ETH, a five-year low.

Ethereum’s supply has seen a drop of more than 80,000 ETH since the “Merge” update, which pegged the annual deflation rate at 0.11%.

Crypto Mining Tax Could Be Avoided Under Proposed US Debt Ceiling Deal

Legislation to lower the US debt cap and avoid a possible default could eliminate a proposed tax on the energy consumption of cryptocurrency miners.

A bill, released by U.S. lawmakers on Sunday, proposed a two-year suspension of the debt ceiling, without including President Biden’s desired tax hikes for corporations and wealthy individuals.

This bill would block “proposed taxes”, such as a 30% tax on electricity used by crypto miners from Biden’s FY2024 budget.

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Although the tentative agreement serves as a compromise to avoid a default, the bill still requires the approval of a divided House of Representatives, with the vote expected on Wednesday, May 31, before a possible default deadline. of June.

Asset managers are increasing their long bitcoin positions

A Commitment of Traders (COT) report says asset managers halted their two-week reduction in open bitcoin long positions, adding 24 contracts instead.

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Along with the bullish signals, the report showed that asset managers also reduced their short bitcoin positions by 194 contracts.

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