‘Tax Day’ to Spark New Bullish Momentum For Bitcoin
The cryptocurrency market has been hungover ever since Bitcoin entered the futures trading market in December 2017. The downward path in 2018 removed the majority of its market cap, from about $826 billion to $330 billion today. Bitcoin had a similar fate as its market cap plunged from $324 billion to $138 billion, and its price shed $12,000, from $20,000 to about $8,000. Today, however, is ‘Tax Day’ in the United States.
The IRS says cryptocurrencies constitute property, which is subject to capital gains tax. Institutional investors argue that ‘Tax Day’ is the trigger of the new bullish run.
“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,”
Blockchain Capital co-founder Spencer Bogart told CNBC.
The 1,300 percent upward move seen in the Bitcoin price chart should result in $25 billion in taxes for digital currency holdings in the United States, according to Tom Lee, Head of Research at Fundstrat Global Advisors. Lee says that U.S. households captured 30% of the $590 billion capital gains from cryptocurrencies in 2017. The tax rate of 27% on a $92 billion taxable gain means that U.S. holders owe $25 billion.
On April 15, Tom Lee said that Bitcoin may be bottoming;
CRYPTO: Where was #BTC 1M prior to ~$20,000 top? $5,900. In other words, BTC this year rollbacked prices similar to what happened in 2014/15. Could be same bottom as the 2014/15 bottom. Also, selling related to capital gains taxes in US should be lifting as tax day is 4/17. pic.twitter.com/AyOgKPoR2x
— Thomas Lee (@fundstrat) April 15, 2018
Lee expects Bitcoin to reach $20,000 again by mid-year and $25,000 by the end of 2018. By early 2020, the cryptocurrency is predicted to be worth $91,000.
An investor letter published by Dan Morehead, Founder and CEO of Pantera Capital, said that bitcoin is “highly likely to have exceeded $20,000 within a year.”
Tim Draper, an early backer of Tesla, Skype, and SpaceX, announced that he predicts that Bitcoin price will reach $250,000 by 2022. Draper said he expects that, in five years, whoever tries to pay in fiat currency will be laughed at.
Horizon Kinetics’ Murray Stahl argued that Bitcoin could be worth the value of all the currency in the world because fiat money can be “debased”. According to Barron’s estimate, this would mean a figure of $361,000 per Bitcoin.