Welcome to follow (Jiu Jiao's Bitcoin Daily), an eight-year veteran in the market, a writer for Babit column, and a Binance content writer! Teaching you to observe crypto logically.

Today we will focus on the following topics:

  • Latest Bitcoin Market Analysis

  • Reasons Behind BGB Price Surge

  • A Big Shot's Prediction About Bitcoin's Bull Market Peak

Alright, without further ado, let's get to the point!

Bitcoin Market Analysis: The IRS Takes Action on DeFi, How Will Regulatory New Rules Affect the Crypto Market? **

Hello everyone, I am Jiujiao, an eight-year veteran in the market, here to help you see the trends in the crypto world clearly.

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Without further ado, today we will first look at Bitcoin's market analysis, and then discuss the latest actions of the IRS regarding DeFi, which will have what potential impacts on the crypto market?

Bitcoin Market Analysis: December Closing, Price Weakens, Market Signals Unclear

Today is December 31, and the Bitcoin price is still hovering around 94,000. As the year-end approaches, the market's trend remains full of uncertainty.
In the past few days, the volatility of Bitcoin's price has significantly slowed down. Today, with just a few hours left until the year-end closing, if there is no substantial upward fluctuation, we can clearly see that Bitcoin's monthly line for December will end with a hanging man shadow line, also known as a Pinbar. This is a signal that the market is stagnating or may even decline.

Looking back at the market over the past month, I anticipated on December 23 that Bitcoin would face a correction, based on my self-created three-line system. Since the 20th, the system has issued a downward signal. At that time, Bitcoin's price was still around 100,000, and today, the price has dropped to 92,000, almost close to the lowest point since December.

Next, will Bitcoin continue to decline? I believe this mainly depends on the support situation in the range of 94,000 to 90,000. If this range is effectively supported, we may see a rebound again in the short term. However, from the current trend, there is still a possibility of buying cheaper Bitcoin in the short term.

The IRS Takes Action: What Will Be the Future of the DeFi Market?

Recently, a policy news from the IRS regarding DeFi has attracted widespread attention in the market. The IRS announced that DeFi platforms will be included in the existing tax framework, meaning that transactions and yields on DeFi platforms will face tax regulation.

So, what impact will this news have on the crypto market? Here is my personal analysis:

1. Promote the compliance development of DeFi

The introduction of the tax plan may force DeFi projects to pay more attention to compliance. This means that DeFi platforms may need to strengthen the tracking and reporting of transactions and yields to ensure compliance with legal requirements. While this increases the costs and complexities of compliance, it will be good news for some large projects. Because compliance will promote cooperation with traditional financial institutions, driving the further development of DeFi projects.

2. May reduce market liquidity of DeFi platforms

However, if DeFi users and developers must comply with tax regulations, it may lead some people to reduce their participation on these platforms, thereby reducing market liquidity. Moreover, many DeFi projects rely on cross-border transactions and global user participation. If the U.S. intensifies regulatory efforts, it may force investors to move their funds to other crypto markets, reducing the attractiveness of the U.S. market.

3. Impact of Tax Policies on DeFi Related Tracks

Although these tax policies have limited impact on the overall crypto market, they may have a more significant effect on some tracks directly related to DeFi. Specifically, stablecoins, DeFi native tokens, and lending and yield tokens may all be subject to fluctuations.

  • Stablecoins: If the U.S. taxes DeFi, the cross-platform liquidity, lending, and exchange functions of stablecoins may be restricted, thereby affecting market stability.

  • DeFi native tokens: such as UNI, AAVE, SUSHI, etc. These tokens are usually used for governance, rewards, and staking on the platform, and may be affected to some extent.

  • Lending and yield tokens: For example, YFI, MKR, SNX, etc. These tokens are used for DeFi lending and yield generation protocols and may face pressure for tax compliance.

How the market develops: Can regulation bring industry maturity?

Overall, although these tax policies contradict the decentralized philosophy, they are also a part of the rapid development process of the crypto market. While some DeFi projects may face adjustments, the strengthening of legal and tax compliance will bring a clearer regulatory framework to the market, which is undoubtedly beneficial for the long-term development of the industry.

As regulation improves, more traditional financial institutions may enter the crypto field, thus driving the entire industry towards a mature market. The dividends of the crypto market will gradually be distributed to those early investors. Therefore, entering the crypto market early is necessary to enjoy these era dividends.

Summary

Today we analyzed the current situation of Bitcoin and the potential impact of the IRS's tax policy on DeFi on the market. Although there may be a correction in the short term, in the long run, the crypto market still has huge growth potential, and the improvement of regulation will also help the industry develop more healthily.

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That's all for today's content, I hope it helps you! Don't forget to like, share, and subscribe to my channel. See you next time!