Key Insights:
- The crypto market may react fast if the US completely cuts income tax.
- The improving Fed rate cut odds and steady job data give the crypto prices short-term support.
- The crypto prices are still weak, but a 14% rise from late-November lows shows buyers are returning.
The crypto market dropped more than 36% from the early-October high. But it moved up almost 14% from the low made on 21 November.
This slow rise in the crypto prices shows some buyers are coming back again. December is important because many new updates may affect the money flow into crypto, mostly around the fact that the US might just cut income tax completely.
How a Possible Income Tax Cut Connects to the Crypto Market?
Trump said the United States may remove income tax “completely.” He said this may be possible because the government can collect money from tariffs.
A tariff is an extra amount added to goods that come from other countries. When this amount is added, the importer adds this cost to the final price.
So people inside the country pay more for the same item. Tariffs are not a tax on foreign sellers, but a cost that people pay when they buy goods like food, tools, and electronics.
This works like a quiet tax on daily spending. People cannot avoid this because everyone buys basic items. But these higher prices also send more money to the government.
Trump said this extra money can replace income tax. If income tax is removed, people will keep more money from their salary each month.
When people have extra money, many of them may use at least a small part of it in crypto assets like Bitcoin or others.
Because of this, the crypto market is watching the tariff and tax news very closely.
US Job Data and Fed Rate Cut Hopes Give Support
US jobless claims went down to 216,000, as compared to the expectation of 225,000. This shows the job market is cooling but not collapsing.
When people feel their jobs are safe, they are more comfortable taking small risks. Besides, the Fed rate cut chances for December are now near 84.7%. A rate cut adds more money to the US system.
Reports say almost $1.5 trillion may enter the system. When more money enters the system, the risk-bet assets like the crypto prices usually respond better.
It becomes easier for traders to buy and hold, which in return helps boost the confidence of traders for the crypto market.
These two things: Steady job numbers and strong rate-cut expectations, help build a better mood in the crypto market.
Crypto Market: On-Chain Data Shows Selling Is Slowing Down
The 90-day Spot Taker CVD for Bitcoin moved from strong selling to a neutral level. Spot Taker CVD shows if people are using market orders to buy or sell the crypto.
When it heads toward neutral, it means sellers are not as active as before.
Some long-term holders are borrowing money using their Bitcoin. This means they believe the long-term view is still strong.
But it also means their coins can be sold by force if the price drops again. For now, the data shows that selling pressure has reduced. This helps the market stay above the recent lows.
What December May Bring for Crypto Prices?
The crypto market was weak in October and early November. But the rise from the November 21 low shows new buyers are slowly entering again.
The market now waits for one clear update, and any of these developments can bring a strong move.
First, with people keeping more money if income tax is removed. On the other hand, a confirmed Fed rate cut in December could help boost liquidity in the crypto market.
Simultaneously, a clear new tariff plan can also help, which might provide some insights amid the uncertainties over the macroeconomic concerns.
All of these can increase the money entering risk assets. When this happens, the crypto market usually reacts fast.
December has many important updates, and even one strong update can help the crypto prices move higher.