Bitcoin Stages V-Shaped Recovery on Trump Tax Bill Hopes

Bitcoin Surges Back Above $105,000 Level

July 7, 2025, marked a dramatic turnaround for Bitcoin as the world's largest cryptocurrency staged a remarkable V-shaped recovery, climbing back above the $105,000 level. This surge came after a sharp decline the previous day, with the recovery driven by growing expectations surrounding President Trump's anticipated new tax legislation framework.

The cryptocurrency market witnessed a significant spike in liquidity across digital assets over the past 24 hours, with Bitcoin leading the charge. Market analysts attribute this sudden reversal to a combination of political developments and economic news emanating from the United States, particularly speculation about the Trump administration's forthcoming tax policy reforms.

Trump Administration's Crypto-Friendly Stance

Since taking office in January 2025, the Trump administration has consistently pursued policies favorable to the cryptocurrency industry. The administration's approach has focused on reducing regulatory barriers and providing tax incentives to foster growth in the digital asset sector. This policy direction has been sending positive signals to market participants throughout the year.

Industry insiders expect the new tax legislation to significantly reduce the tax burden on cryptocurrency transactions. Key provisions under discussion include reduced capital gains taxes for digital asset trades, tax incentives for mining operations, and preferential rates for long-term holders. These potential changes have created a wave of optimism among cryptocurrency investors and institutions.

According to CoinMarketCap data, Bitcoin's market capitalization has reached approximately $96 billion, with trading volume exceeding $530 million over the past 24 hours. This represents a substantial increase from typical trading levels, demonstrating heightened market interest and participation.

Technical Analysis Points to Bullish Momentum

Chart analysts are highlighting Bitcoin's successful breakthrough of a crucial technical resistance level. The $105,000 threshold had acted as a formidable resistance barrier for several weeks, and its upward penetration suggests potential for further gains in the near term.

Technical indicators on TradingView are displaying positive signals across the board. The Relative Strength Index (RSI) has emerged from oversold territory, confirming the upward momentum, while moving averages are forming a golden cross pattern that typically indicates bullish sentiment.

Altcoin Market Rallies in Sympathy

Bitcoin's strength has had a positive spillover effect on the broader altcoin market. Ethereum surged 8% to breach the $4,000 level, while Solana and XRP posted gains of 6% and 5% respectively. This broad-based rally suggests renewed confidence in the entire cryptocurrency ecosystem.

Meme coins have also participated in the rally, with Shiba Inu leading the charge with a 12% gain over the past 24 hours. Market observers are noting signs of a potential new meme coin season beginning, with macroeconomic news flow since early April appearing favorable for these speculative digital assets.

Institutional Investment Flow Continues

Another significant driver behind Bitcoin's recovery has been the continued influx of institutional investment. Bitcoin ETF inflows remain robust, and major investment banks are expanding their cryptocurrency investment product offerings to meet growing demand from institutional clients.

Major asset managers including BlackRock and Fidelity have seen consistent inflows into their Bitcoin ETF products. The increasing participation of institutional investors is viewed as a stabilizing force for the market, providing a more solid foundation for sustainable price growth.

Risk Factors and Market Cautions

Despite the positive momentum, experts emphasize the need for cautious optimism. Cryptocurrency markets remain highly volatile, and the potential for rapid reversals cannot be ignored, particularly in the event of regulatory changes or macroeconomic deterioration.

The escalating political conflict between President Trump and Elon Musk adds another layer of uncertainty to the market outlook. Musk's announcement of a new political party has introduced questions about policy stability and could potentially impact cryptocurrency markets if political tensions continue to escalate.

Investment Strategy and Market Outlook

In this environment, financial advisors are emphasizing the importance of diversification and risk management. Rather than reacting to short-term volatility, they recommend developing long-term investment strategies based on fundamental analysis and personal risk tolerance.

The coming weeks will likely see increased focus on the Trump administration's tax policy announcements and Federal Reserve monetary policy guidance. These macroeconomic events are expected to serve as primary drivers of cryptocurrency market direction, making them essential factors for investors to monitor closely.

Original: https://trendy.storydot.kr/economy/bitcoin-v-recovery-trump-tax