Bitcoin is looking up now that the debt ceiling has been reached. Finalizing the deal in Congress could provide the crypto markets with enough breathing room for another rally. The Biden administration wants to raise the mining electricity tax by 30% over the course of three years. While it is not yet clear, Ohio Congressman Warren Davidson tweeted that “One of the victories is blocking proposed taxes,” and it is highly likely that he is referring to the crypto mining tax that negotiated at the debt ceiling talks.
In addition to avoiding the tax increase, BTC could also receive a boost from the rising stock markets. The S&P 500 and BTC have shown a 77.5% positive correlation over the past three years. The S&P 500 has already broken its downtrend, and with the help of AI pricing and the resolution of a potential debt ceiling crisis, positive pricing is likely to continue.
There are potential risks for Bitcoin, such as higher and longer FED rates in the coming months and the recently surging dollar index. The dollar index is on the verge of breaking out of a 6-month-long downtrend, which could limit the upward movement of Bitcoin. However, the correlation between the dollar index and Bitcoin is much lower than the correlation with the stock market.
From a technical standpoint, a pullback to 25,425 and a bounce from that former resistance level could boost Bitcoin. The orange short-term trend, which could also be interpreted as a flag formation, could be key for any upward movement. If this trend is broken, the price could first rise to the previous top of 31,000 and then potentially to 35,400 over the medium term. Below the neckline of 25,425, a head and shoulder formation had emerged. While it is not perfect formation, it is close enough. The target of that formation is 35,400, which could be a significant level to monitor over the medium term.
