Bitcoin and cryptocurrency prices have soared this week, with bitcoin nearing $50,000 per bitcoin for the first time since mid-May (subscribe now to Forbes’ CryptoAsset & Blockchain Advisor and discover crypto blockbusters poised for 1,000% gains).
The crypto price rally—led by top ten tokens by value ethereum, dogecoin and uniswap and adding $300 billion to the market over the last week—comes after ethereum underwent a closely-watched upgrade this week, helping ethereum far outpace bitcoin and raising expectations of the so-called “flippening.”
However, prices are rising even as fears mount the U.S. could be about to pass far-reaching bitcoin and cryptocurrency tax reporting legislation as part of the Infrastructure Investment and Jobs Act that opponents say threatens the technology’s development in the country.
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Ethereum, the meme-based dogecoin, and the token of the decentralized Uniswap exchange have made gains of between 20% and 30% over the last week, with bitcoin, Binance’s BNB, cardano, and XRP each up between 5% and 10%.
“Bitcoin has been performing strongly since it bounced from the $30,000 support we indicated earlier,” Joe DiPasquale, the chief executive of crypto hedge fund BitBull Capital, said via email. “Now it sits in a critical range and is eyeing a major breakout above $40,000, bolstered by the proposed crypto amendment in the U.S. infrastructure bill.”
Last week, a provision in the bipartisan bill was added to raise cash via stricter tax rules on a broad definition of cryptocurrency “brokers” that some fear will make crypto mining—securing blockchains and validating transactions in return for new tokens—and wallet providing almost impossible in the country. This week, an amendment was proposed that somewhat clarifies the definition of a broker, explicitly excluding validators, hardware and software makers as well as protocol developers.
Then it emerged a fresh amendment had been proposed that excludes only proof-of-work mining, or the selling of hardware or software that permits individuals to control private keys that provide access to digital assets. Bitcoin, by far the largest cryptocurrency by value, uses proof-of-work mining though newer tokens, including Binance’s BNB, use so-called proof-of-stake mining models that reward those who “stake” their existing tokens. Ethereum’s upgrade this week is part of a long-planned move from proof-of-work to proof-of-stake.
“This is not the time to pick technology winners or losers in cryptocurrency technology,” said Musk, who has become one of the world’s biggest bitcoin and crypto influencers after added $1.5 billion worth of bitcoin to Tesla’s balance sheet this year. “There is no crisis that compels hasty legislation.”
The proposed changes to crypto tax reporting rules have been roundly derided by crypto investors, industry experts and technologists.
Tech investor and former Coinbase chief technology officer, Balaji Srinivasan, branded the latest amendment “a backdoor bitcoin ban,” while crypto lobbyist Jerry Brito, the executive director of the Coin Center think tank, called it “disastrous” and “ridiculous.”
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Despite the outcry over the infrastructure’s crypto provision, ethereum has continued to ride its wave of upgrade support this week, confounding fears there could have been a sell-off after the upgrade’s hype wore off.
“[Ethereum] is looking solid in terms of price action instead of experiencing a sell-the-news drop,” said DiPasquale.
“We expect bitcoin to lead the market in the coming weeks before ethereum and other altcoins can start pushing for gains in what could become the second phase of this year’s bull run.”