This year tax deadline for all Americans is set on April 17, and there is high feasibility that before this day there will occur all-out vending of cyber-assets into the US public currency – dollars.
Tom Lee, the known bull of Wall Street and a keen supporter of bitcoin, says American households very probably are due $25 billion in capital gains taxes for their cyber-assets.
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Time For Taxes. Are Bitcoiners Ready?
On April 5, Lee, who is also the chief of research at Fundstrat Global Advisors, said:
"This is a massive outflow from crypto to USD, and historical estimates are each $1 of USD outflow is $20-$25 impacts on crypto market value."
As the only significant Wall Street expert, who “pro forma” talks about BTC and its ilks, he added that there is a vending tension by cyber money trading venues which are subject to income tax, as per the US law.
In particular, lots of crypto bourses can boast with the 2017 net income of over $1 billion, “and keep working capital” in BTC or ETH, but not USD. Therefore, in order to fit these tax requirements, the crypto bourses are also vending bitcoin and its "little brother" ether.
This Will Not Add Anything To Bitcoin’s Karma
Since mid-December, when bitcoin reached its all-time record of $20,000 and then in a few days dropped below $12,000, the “king” of all cryptos has not managed to recover. Instead, it kept fluctuating between the high of $15,000 and the low of $6,000, which it reached at the beginning of this year February.
In total, the plummeting of BTC was 50% in the first three months of 2018. Nevertheless, bitcoin’s price is still 450% higher than over the past year.
As usual, lots of crypto-skeptics started talking about the bubble burst, and there have started emerging theories that the total market cap of bitcoin will go below $77 billion by 2019 from $118 billion as of writing. However, most commonly this happened due to regulatory uncertainty in many countries.
And the tax-related sell-off, apparently, would not make bitcoin stronger. On the contrary, it would add to its difficult start of 2018. Concerning this matter, Fundstrat’s Lee said that the regulatory jeopardies remain principle. At the same time, bitcoin misery index indicates that there are negative tendencies.
How Will It Go?
Because, as we have already said, bitcoin reached its all-time record back in December 2017, lots of US investors may still owe capital gains taxes on cryptos. And it doesn’t matter, that after that BTC dropped in price, by the way. So, naturally, people will start selling bitcoin and its ilks to protect themselves from high taxes.
It is noteworthy that the US Internal Revenue Service considers, as well as, acts towards cyber-assets as properties. Thus, all transactions, carried out with these coins, need to be taxed.
Although bitcoin will not be stable after a cumbersome sell-off, Lee believes that it will get back on its feet with time. Moreover, Lee assumes that the value of BTC will nearly triple by the end of 2018.