Crypto Tax Hopes Dashed as US Senate Passes Budget Bill

The cryptocurrency market is facing renewed regulatory headwinds after the U.S. Senate passed a major budget bill without including a much-anticipated amendment aimed at easing the tax burden on digital asset users. According to a report from analyst @rovercrc, a proposal championed by Senator Cynthia Lummis, which would have waived capital gains taxes on small crypto transactions, failed to make it into the final version of the bill. This development represents a significant setback for the industry, which has been lobbying intensely for clearer and more favorable tax guidelines to foster wider adoption and innovation. The bill's passage, which occurred on a narrow 50-50 vote broken by the Vice President, underscores the contentious political environment and the challenges the crypto sector faces in achieving legislative progress. For traders, this outcome injects a fresh dose of uncertainty, often a catalyst for bearish sentiment and increased market volatility.

The market's reaction to this legislative disappointment was palpable, particularly in the price action of Ethereum (ETH). Over the last 24 hours, the ETH/USDT pair registered a significant decline of 3.838%, shedding $96.44 to trade at approximately $2,416.53. Price action shows a clear struggle, with the asset reaching a 24-hour high of $2,521.58 before succumbing to selling pressure and dropping to a low of $2,404.07. This price range is critical for traders. The $2,400 level has emerged as a crucial short-term psychological and technical support. A sustained break below this point could open the door for a deeper correction, potentially targeting the next support zones around $2,300. Conversely, the daily high near $2,520 now acts as a formidable resistance level that bulls must overcome to regain control. The trading volume of 331.22 ETH on this pair indicates active participation during this downturn, suggesting conviction from sellers following the news.

Ethereum's Underperformance and Cross-Pair Dynamics

Further analysis reveals that Ethereum's weakness is not isolated to its USD pairing. The ETH/BTC ratio, a key indicator of altcoin market strength relative to Bitcoin, also took a hit. The ETH/BTC pair fell by 1.286% to 0.02303000 BTC, touching a low of 0.02274000. This underperformance suggests that in the current risk-off environment, capital is either flowing out of Ethereum or rotating towards the relative safety of Bitcoin. For traders, a declining ETH/BTC ratio is often a bearish signal for the broader altcoin market. When Ethereum, the leader of the altcoin pack, struggles against Bitcoin, it typically dampens sentiment across the board. Monitoring this ratio is essential; a reversal and climb back above the 0.02376000 high would be a bullish signal, but continued weakness could precede further price drops for ETH and other altcoins.

Interestingly, while Ethereum has faltered, not all altcoins have followed suit, presenting unique pair trading opportunities. The SOL/ETH pair, for instance, has rallied an impressive 2.595% to a high of 0.06800000. Similarly, the ADA/ETH pair saw a gain of 1.838%, reaching 0.00030470. This divergence indicates that some traders are not exiting the market entirely but are instead rotating capital from Ethereum into other Layer-1 blockchains like Solana and Cardano, perhaps speculating on their relative strength. This creates a potential strategy for sophisticated traders: going long on SOL/ETH or ADA/ETH while remaining cautious or neutral on ETH/USD. As the budget bill now moves to the House of Representatives for another vote, traders must remain vigilant. Any further news on the legislative front could trigger sharp movements, and the key support level for ETH at $2,400 remains the most critical price point to watch in the immediate term.