Bitcoin

Bitcoin Price is Up 13.6% Since Tax Season Came to an End

Ricardo Esteves | April 21, 2018 | 9:27 am
Bitcoin

Bitcoin Price is Up 13.6% Since Tax Season Came to an End

Ricardo Esteves | April 21, 2018 | 9:27 am

Bitcoin is performing well in the market today as it tests the $9,000. The newfound bullish momentum is not a surprise for Fundstrat Global Advisors analyst Tom Lee, who said that tax filings were bringing the cryptocurrency market down and ‘Tax Day’ would eventually trigger an upside move for the bitcoin price.

Bitcoin Reaches $9,069 As Sentiment Improves

The bitcoin price has been steadily rising since April 12 after being buoyed at the $6,500-$7,000 range. The number one cryptocurrency by market cap is up by nearly 40 percent from the April lows as it has already crossed the $9,000 line to print a high at $9,069, according to TradingView.

Tom Lee, head of research at Fundstrat Global Advisors, had previously explained that the tax liability of the massive capital gains obtained by cryptocurrency investors last year was behind the downward market pressure as holders of Bitcoin et al were cashing out to pay taxes.

“The U.S. tax day is behind us (April 17th) and since then, the overall tone in the crypto market has improved. We believe the ‘winter’ is ending for Bitcoin, as the crypto to fiat pressures from tax day subside, and as headline risks seem to be fading”, Tom Lee said in a note to investors.

As cryptocurrencies constitute property, according to the IRS, these are subject to capital gains tax. The 1,300% upward move in 2017 might have resulted in $25 billion in taxes in the United States. The head of research at Fundstrat Global Advisors argued that U.S. households captured 30% of the $590 billion capital gains in 2017 and the $92 billion taxable gains were subject to a 27% rate.

Tom Lee also recommended investors to keep an eye on the CoinsharesCrypto ETF, a leading indicator for bitcoin, which he compared to Punxatawney Phil, a groundhog who predicts whether winter is over based on its shadow.

“We believe large institutional investors globally use this ETF as a way to quickly gain exposure to Bitcoin. Hence when shares rise, big money is buying bitcoin”, Tom Lee added.

Tom Lee predicts Bitcoin will reach $20,000 by mid-year and $25,000 by the end of 2018. The analyst sees Bitcoin at $91,000 by early 2020.

Sentiment in the industry has also improved considerably after news that leading investment funds are entering the cryptocurrency market, including George Soros and the Rothschild family. The Soros Fund Management venture internally approved the trading of virtual coins. Soros has recently called the market a “bubble” and that investors were operating on “some kind of misunderstanding.”

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  • Bob

    “The Soros Fund Management venture” … People keep mentioning this like it is a good thing. Ummmm I don’t how much research into Soros the youngster in crypto have done but Soros and his fund have made Billions shorting currencies not going long. Short = going down in price. Actually His fund nearly sent the Bank of England broke when he shorted the pound. He and is fund isn’t going to invest or go long in BTC. If anything they are going to short it dry till there is nothing left. People think his sentiment has changed towards crypto. No it hasn’t, he just see’s it as a pool of stupid money his fund can suck dry. If anything to me that is news to feed bearish sentiment not bullish. I don’t now if people in crypto are really stupid and think that 1/4 of BTC they purchased is going to buy them a Lambo next week or just too ignorant to actually do some research on Soros and how his fund has made money over the decades. You don’t want the lokes of Soros anywhere near BTC or crypto because he will kill it!

    • Paul Desgrippes

      Shorting in and of itself does not make the price decrease, it’s a bet on the future price trend. BTC actually has a tendency to rise when people are overly short so that the shorts get squeezed out. The fact that Soros has made money in the past from betting on the decline in price of an instrument is not really relevant, traders try to make profit in either direction they don’t care which way, they are price agnostic. His most recent big trade was being long on gold.

      If you ever expect to see BTC at high 5 figure levels that is not going to happen without institutional capital inflow.

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