Here’s Why Bitcoin’s Price Hasn’t Breached the $7,500 Mark So Far in April
Down 52% in price YTD
Bitcoin Is Down 52% YTD
Bitcoin (BTC), the largest cryptocurrency by market capitalization, has not been able to breach the $7,500 price mark so far in the month of April this year. The year 2018 hasn’t been the best so far for the king of cryptocurrencies. Trading at about $14,100 at the beginning of the year, it is now down to near about $6,750 (as at April 10, 1:50 PM UTC); a price loss of 52% in the year so far.
While there are a number of reasons for the bearish slide in Bitcoin during most part this year; (1) regulatory crackdown, and (2) the impact of US tax filing; are of particular relevance here.
A number of regulatory authorities around the globe have become wary of the financial impact of the rapid rise in the cryptocurrency market. Moreover, the emergence of cases entailing fraudulent or money laundering activities has made the regulators even more vigilant towards the market. The recent world G20 summit held in Argentina had the world’s economic leaders looking for proposals for cryptocurrency regulation. Accordingly, these proposals are required to be submitted by July 2018 to the G20 communiqué.
US Income Tax Impact
Another key factor that has been bearing down upon Bitcoin (BTC) and the cryptocurrency market in general since the beginning of the year is the US tax filing date moving ever closer. The US is moving closer to its income-tax filing date – April 16th. This has come to become one of the key factors pressurizing the market for Bitcoin (BTC) this month.
Here’s how. As the tax payment deadline nears, many taxpayers may have to cash out of their crypto holdings to make good their tax obligations. Then, aggregate capital gain taxes due on digital assets trading alone is estimated at $25 billion in the US.
Recently, Tom Lee, the head of research at Fundstrat Global Advisors, commented on the expected “massive outflow from crypto to dollars.” Lee also pointed to the historical estimate that “each $1 of USD outflow has a $20-$25 impact on crypto market value” and the “selling pressure by crypto exchanges who are subject to income tax in U.S. jurisdictions.” A lot of cryptocurrency exchanges have over $1 billion in reported net income for 2017, with working capital constituted in cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH), not the US dollar. With tax filing obligations upon their heads, these exchanges may have to sell their BTC/ETH to provide for their tax liabilities.
Ultimately, Lee expects Bitcoin to find footing after tax day (April 16). Do you? Let us know your thoughts in the comments section.