Taxation is an important aspect of the cryptocurrency industry. It is very much possible the taxation season effectively triggered the recent Bitcoin price decline. With these concerns almost gone, the markets are rebounding strongly. This yearly cycle will continue to repeat itself for the foreseeable future.
Taxation and the Bitcoin Price Sell-off
In recent months, the Bitcoin price declined by as much as 65% compared to late 2017. There are many different reasons as to why this has happened. One potential outcome is the taxation season. More specifically, people noted a lot more capital gains tax in 2017 than expected. Regardless of current market movements, these taxes still need to be paid
Doing so requires Bitcoin holders to sell more of their portfolio. Twice as much even, at the prices as of last week. It is only normal this will have a negative impact on the Bitcoin price as a whole. Taxation season is always a tough time for the cryptocurrency markets. Tax selling has been a very real thing for quite some time now, according to Blockchain Capital Spencer Bogart. He added:
“The tax selling has been a very real thing, and it has accelerated over the past couple of weeks. I’m not surprised as we get a bit closer to Tax Day that some of that pressure, that selling pressure, is starting to ease a bit.”
The Bitcoin Outlook for 2018
It is too early to determine if the taxation deadline is the only reason for 2018’s bear market. Pressure on Bitcoin has been mounting for several months now. With a strong bounce across all markets last night, people have high hopes again. The $8.000 price level could not be sustained, though, as the value fell below that threshold pretty quickly.
Other cryptocurrencies note similar positive momentum. Ethereum, Litecoin, and XRP are all heading back in the right direction. For now, there will be no rally on the same level as in late 2017. There is still too much bearish pressure across all markets to make solid gains day after day. Bogart confirmed the bear market is not be over by any means.
For now, it seems safe to assume Bitcoin is still one’s best bet in the search for legitimate digital currencies. Any ICO token is on the SEC’s radar and potentially subject to a crackdown. Bogart confirms Bitcoin is the only currency on the SEC’s “safe side”, for the time being. This can effectively lead to bigger Bitcoin price gains in the coming months. Setting a new all-time high in 2018 still remains very much possible.