The US Infrastructure Act will really affect Bitcoin? not necessarily

Blockchain data shows that although US regulators are likely to implement crypto taxation plans, institutional investors are still willing to return to Bitcoin. According to recent research data from the blockchain data analysis company Glassnode, it is found that US legislators and regulators are increasingly scrutinizing the crypto market. Among them, the most concerned is the encryption tax reporting clause of the U.S. Infrastructure Act, which is about to be passed. The move may only scare retail investors, but it will not scare institutional investors.


The Berlin-based blockchain data company found that large investors represented by large dollar transactions are pushing the price of Bitcoin up, which has increased by nearly 20% since last week. Many analysts believe that this trend shows that these institutional investors pay more attention to the advantages of cryptocurrencies rather than potential problems.

LMAX Digital is a cryptocurrency platform that primarily serves institutional investors. The agency’s cryptocurrency strategist Joel Kruger said:

“Investors are focusing on the positive aspects of regulation rather than the negative aspects, and the US government is also willing to listen and realize that the infrastructure bill needs more clarification.”


Since the beginning of August 2021, the volume of transactions on the Bitcoin chain with a transaction value of at least $1 million has increased by 10%, accounting for nearly 70% of the total value transferred on the Bitcoin chain. At the same time, the proportion of small bitcoin transactions in the entire trading market has declined, as shown in the figure below. Since July 2020, transactions worth less than US$1 million have fallen from 70% of market dominance to approximately 30-40%.

U2wNufP9BvpSDGJY8QJ1sk537KwHg502I5St2Ugr.pngThis means that institutional investors are optimistic about the market’s rise at this stage. On the other hand, the cryptocurrency market is also paying attention to fierce global political and regulatory developments, including the $28 billion tax reporting clause involved in the controversial U.S. Infrastructure Act, and the European and other regions’ bidding on the digital currency exchange Binance ( Binance) continues to crack down.

Analysts and industry experts said that although the regulation may be further strengthened, institutional investors are still optimistic about the future of Bitcoin.

Andrew Tu, an executive of Efficient Frontier, a quantitative trading company, said:

 “In general, institutions will welcome clear and fair regulation. The price increase in the past week…shows that the market has not responded strongly to regulatory concerns, and should not be too worried about the tax report in the U.S. Infrastructure Act. Terms.”

It is reported that the encryption clauses in the U.S. Infrastructure Act have been subject to controversy because the relevant clauses aim to expand the scope of taxation of digital assets and impose restrictions on any encryption company that is regarded as a “broker/broker” (such as requiring provision of subsections). Tripartite report). However, the Senate can still unanimously pass amendments to the bill before the final vote. Compound Finance General Counsel Jake Chervinsky (Jake Chervinsky) previously stated on Twitter that the Senate ended with “68 votes in favor to 29 votes against,” the debate surrounding the encryption clause in the U.S. Infrastructure Act, which shows The original bill will be voted on this Tuesday (August 10). In fact, even if the U.S. Senate passes the unamended version of the U.S. Infrastructure Act on Tuesday, the bill still needs to be approved by the House of Representatives before it becomes a formal law, which means that crypto-related clauses still have a chance to be amended.

Joel Krueger believes that enhanced supervision is good for the cryptocurrency industry, and at the same time it can be seen whether the industry has sufficient resilience. He said:

“This means that the industry is gaining recognition, which ultimately helps cryptocurrencies be further accepted and adopted.”

Other industry insiders also believe that as the industry matures, the crypto market has become more and more accustomed to some of the measures taken by regulators, Andrew Tu added:

“The crypto market is very accustomed to regulatory issues, especially crypto OG hodlers (long-term holders), they have seen multiple cycles of regulatory uncertainty,” 

In fact, according to Glassnode’s data, based on the median of 14 days, the average number of days a single BTC transaction stays dormant or does not move, rises slightly from 7 days to about 10 days, which means that some Bitcoin “old guns” No action was taken to withdraw liquidity at this stage.


Market fundamentals become stronger and healthier

Institutional investors did not pay attention to regulatory uncertainty, but emphasized that Bitcoin’s growing market fundamentals are their reason for optimism.

Noelle Acheson, Head of Genesis Market Insights, said:

“The impact of regulatory issues on Bitcoin is not as great as other cryptocurrencies, and the sentiment behind Bitcoin has been showing signs of change for several weeks.” (Golden Finance Note: Genesis is owned by CoinDesk’s parent company, Digital Currency Group)

On the supply side, the illiquid supply of Bitcoin, or the balance held by illiquid entities, has recently hit a record high, which means that the supply of the oldest cryptocurrency, Bitcoin, is weak.


Posted by:CoinYuppie,Reprinted with attribution to:
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