Investing.com – Bitcoin remained steady on Monday after dipping below $8,000 earlier in the session as traders cheered signs of a revival in cryptocurrency demand.
Bitcoin fell 3.57% to $8,024.9 on the Bitfinex exchange, bouncing from its intraday low of low of $7,900.3.
The bounce in bitcoin signalled renewed investor appetite to buy weakness in the popular digital currency, which rallied from a low of $6,611.0 last week.
While most investors blamed the recent plunge in bitcoin on regulatory pressures, others pointed to the looming U.S. deadline to file taxes as one reason for the selloff.
With nearly $800 million in assets under management, Pantera Capital said last week that Tuesday's deadline for filing taxes in the U.S. triggered the recent fall in cryptocurrencies.
Pantera Capital is not alone in its assertion that crypto investors sold their cryptocurrency holdings to fund their payment of tax liabilities after raking in huge profits last year, when bitcoin rose to $20,000.
Thomas Lee, head of research at Fundstrat Global Advisors said earlier this month that the upcoming April 17 tax filing deadline could lead to massive “selling” of bitcoin. U.S. households likely owe $25 billion in capital gains taxes for their cryptocurrency holdings, Lee added.
Last week’s late rally in bitcoin, however, was described as “huge,” by founder and CEO of digital assets investment fund BKCM LLC, Brian Kelly.
Kelly predicts that with a resurgence in bitcoin transaction volumes, the price of bitcoin could top its $20,000 level, setting a new all-time high of $25,000 by year-end.
“We need the fundamentals, which is the number of transactions, to catch up to this a bit. And if we see that, then I do think we’ve bottomed here and we’ve got a sustainable bull run ahead of us,” Kelly told CNBC.
Since the turn of the year, the bitcoin community has made huge strides to speed up transactions and lower fees on the Bitcoin network, further integrating solutions such as Segwit and Lightning Network.
This has driven the price of transactions fees on the Bitcoin network to about $1.15, well below the $55 transaction fees observed in late December 2017, according to BitInfocharts.com. The number of transactions on the Bitcoin network, however, at 160,000 per day, remain well below the nearly 500,000 transactions per day seen in December.
Proponents of bitcoin hope that popular digital currency's lower fees and faster transactions will eventually attract the attention of large merchants, paving the way for bitcoin to become a mainstream payment option.
Ripple XRP fell 0.33% to $0.65681 on the Poloniex exchange, while Ethereum fell 2.82% to $508.65.