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More Than 8 Percent Rise for Bitcoin! Tax Payment Activities Could Be to Blame

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The start of the year hasn’t been a good one for Bitcoin. It has realized unmatched volatility that saw its priced dip to lows of about $6,000. Things, however, now seem to be changing for the better. The cryptocurrency significantly jumped on Friday, thus bringing its post-tax gains to over 8 percent. By Friday, it was trading at a high of $8,554.97, an improvement of about $300. According to the Bitcoin price index from CoinDesk, Bitcoin’s trade was more than 2.5 percent higher as of 9:48 a.m ET.

Tax Filing Deadline to Blame?

Before this, Bitcoin was trading at $7,834 on Tuesday, which happened to be the original deadline for tax filing this year, thus marking an 8.5 percent rise. On the same day, the IRS portal for filing taxes crashed and this forced the agency to extend its deadline by one more day to give the late filers a chance to complete their tax obligation duties.

Analysts Offer Their Projections

Notably, analysts seem to have an explanation for the recent dip in Bitcoin prices, especially in the last two months. They blame this on the activities surrounding the need for investors to pay for taxes since they have been cashing out in droves considering the massive capital gains realized last year. According to the estimations from Tom Lee of Fundstrat Global Advisors, U.S households owe up to $25 billion in taxes, courtesy of their cryptocurrency holdings. As such, he seems optimistic that Bitcoin will henceforth gain ground and will be trading at around $20,000 by June.

There have been reports from technical analysts that Bitcoin could indeed be heading to the top once again, albeit by a smaller margin. Frank Cappellerri, Nomura Instinet’s Executive director for institutional equities reckons in a note that Bitcoin is on a test mode. He says:

Bitcoin now is testing a very important downtrend line, the same one that the Cryptocurrency failed at in January and again in March (on a log scale). If Bitcoin can break above the line, charts indicate the price can easily rise towards $9,173.

Image Credit: Deposit Photos

What do you think about Bitcoin’s latest jump? Can this be attributed to the recent rush to file taxes? Let us know of your views in the comments section below.

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