Bitcoin retakes $46,000 as rebound continues

Key Points
  • Bitcoin traded as high as $46,050.61 on Monday. That's its highest level since May 16, when it hit $49,770.33, according to Coin Metrics.
  • Bitcoin hovered in the $30,000 range for weeks after falling from its May highs and has been climbing since the end of July, clearing the 200-day moving average Monday.
Dado Ruvic | Reuters

The price of bitcoin broke past $46,000 on Monday morning after a high stakes weekend for the crypto industry as the Senate continued debating the details of its part in the still yet-to-be-passed infrastructure bill.

Bitcoin traded as high as $46,465. That marks its highest level since May 16, when it hit $49,770.33, according to Coin Metrics. It traded at $46,239.88 at 4:05 p.m. The price of ether also broke through $3,000 over the weekend for the first time since May and continued to hover above it at $3,100 Monday.

On Sunday night, the Senate further delayed the vote on the infrastructure bill to Tuesday to allow for more time to debate two competing amendments to a cryptocurrency tax provision, which was initially included in the bill as a pay-for to help the government raise some $28 billion for the infrastructure spending. It's likely that's increasing optimism among traders that cooler heads prevail, said D.A. Davidson's Chris Brendler.

The senators behind the competing amendments offered a compromise amendment late Monday morning crafted with the Treasury Department, Sen. Pat Toomey, R-Pa., said in a press conference Monday.

The bitcoin community made more than 35,000 calls to lawmakers and beefed up its lobbying efforts in the past week. Amid the weekend debate some lawmakers including Sens. Ron Wyden, D-Ore., and Ted Cruz, R-Texas, have emerged as defenders of the cryptocurrency industry — rallying their social media followers to call their senators and urge them to take a do-no-harm approach to the infrastructure bill's crypto tax provision — joining crypto advocates Sen. Cynthia Lummis, R-Wyo. and Toomey.

The markets are probably, at least in part, reacting to the fact that crypto's getting serious consideration and has a growing number of allies on Capitol Hill, Sam Bankman-Fried, CEO of cryptocurrency exchange FTX said on CNBC's "Squawk on the Street" Monday.

"There has been a surprisingly large pro-crypto stance taken in the course of this," he said. "It's one of these things where, even if it loses in this particular amendment, a lot of senators have ended up taking crypto stances that never said anything before publicly. It's showing there's a much bigger presence in Washington of cryptocurrency interest than people expected going into that."

How altcoins like ether captured more and more of the crypto market
How altcoins like ether captured more and more of the crypto market

Sen. Lummis said in the Monday press conference that regardless of the outcome of the crypto tax provision, the discussions of past week were an education to many in Congress who were previously unfamiliar with crypto, calling it a win for the industry overall.

"We have found people [in Congress] who either want to learn, or – because this digital asset industry mobilized on social media to lobby in a very positive, respectful way – we were able to illustrate to members of the Senate that there are a lot of people interested in digital assets, working in some aspect of digital assets," Lummis said.

Gabor Gurbacs, director of digital assets strategy at VanEck, agreed the market seems to have shrugged off worries about the infrastructure bill, but said the gold sell-off and stock market rally are the backbones of bitcoin's price movement Monday, he told CNBC.

"I don't believe that bitcoin rallied because of the gold price correction," he clarified. "The more likely explanation is that market participants are learning how important crypto markets became and are increasingly allocating to these markets. Crypto is so important that it made it into the infrastructure bill and senators are debating crypto provisions before passing the bill."

Bitcoin hovered in the $30,000 range for weeks after it fell from its May highs and has been climbing back up since the end of July.

It has cleared three tiers of resistance in the past three weeks, including the 50-day moving average, the cloud model and, as of Monday, the 200-day moving average, according to Fairlead Strategies.

"The minor breakouts reflect positive short-term momentum and improved intermediate-term momentum following July's successful test of support near $30,000," said Fairlead's Katie Stockton. "The next hurdle on the chart is just above $51,000, which seems in store for a test given no signs of upside exhaustion at this time."