Investing.com – Bitcoin rebounded on Wednesday from earlier weakness as the post-Tax Day rally got underway.
Bitcoin rose 2.82% to $8,119.0 on the Bitfinex exchange, after falling to a low of $7,831.0.
With the April 17 U.S. tax filing deadline in the rear-view mirror, market participants were keen to observe whether cryptocurrencies would fulfil recent predictions of a post-tax day rally.
Analysts said earlier this week that the wave of selling in cryptos to fund taxes – following huge crypto profits in 2017 – would grind to a halt, supporting a rebound in cryptocurrencies.
"Tax-selling has been a significant factor in downward crypto prices over the past few weeks. I would expect this downward pressure to abate after tax day," Spencer Bogart, partner at Blockchain Capital told CNBC on Monday.
Tom Lee, managing partner and the head of research at Fundstrat Global Advisors, echoed Bogart's comments, predicting that the end of tax-selling pressure would support a rally in bitcoin to $25,000 by the end of 2018.
Trading action across large-cap cryptocurrencies appeared to validate the post-tax day claims as Ethereum, Ripple XRP, Bitcoin Cash and Litecoin edged higher supported by continued demand.
Data from coinmarketcap.com showed the total market cap of cryptocurrencies rose to $339 billion – at the time of writing – from $250 billion last week, pointing to signs of renewed demand for cryptocurrencies.
Bitcoin Cash rose 16.40% to $887.48, while Litecoin rose 3.37% to $138.41.
Ripple XRP rose 6.11% to $0.69820 on the Poloniex exchange, while Ethereum rose 2.19% to $516.49.