31.05.202109:22 Forex Analysis & Reviews: Bitcoin inflows turn negative

US wants to collect fees from taxpayers who trade cryptocurrency. Perhaps, this was brought by the sudden boom in the crypto market. In any case, the Department of Treasury submitted a proposal that asks crypto exchanges to report to the Internal Revenue Service (IRS).

The bill requires banking and financial institutions to report large cryptocurrency transactions, in order to curb money laundering and tax evasion. Such a move is believed to make crypto transactions more transparent.

Analysts are convinced that the reason why the US government and tax office suddenly drafted a law is because investors have obtained huge profits from the crypto market. Until 2014, the question of whether cryptocurrencies should be treated for tax purposes as property or as currency was not even raised. From 2013 to 2015, fewer than 1,000 taxpayers reported profits from cryptocurrency trading.

Now, the crypto market has swelled, and according to the latest data from Glassnode, the recent bearish trend appears to be changing. There is also a high chance that Bitcoin will consolidate around $ 40,000 soon.

But over the past week, Bitcoin inflow has turned negative, which suggests that investors are leaving the exchanges. Perhaps, this is a sign that they no longer want to trade cryptocurrencies, and are transferring their assets to much safer storage. However, having fewer coins available for selling means that there is a higher chance of market growth. Hence, when inflows are bearish, outflows are bullish.

Back on April 22, Bitcoin inflow was positive. And on May 17, it reached a 14-month high of 10.628 BTC. But selling pressure increased that time, so prices fell to $ 30,000. Now, the balance on exchanges is down by 7,597 BTC, so it is at 2.53 million. Only an increase in outflow will to restore market confidence and return the cryptocurrency to a bullish path.

But since buyers are still not very active at $ 36,200, there is a high chance that Bitcoin will continue to drop, most probably towards $ 31,000. Then, a lot will depend on it as a break below the level will further sink the quote towards $25,800 and $21,600. Bitcoin will turn up only if the quote goes above $41,100. Such will set off a jump towards $46,700 and $52,000.