The most bullish crypto pundits believe the tax deadline that passed on 17th April has been the main reason for the downward movement of cryptocurrencies this year. Bitcoin had the best week ever since February or March as its price increased from $6,786 to over $8,000. Traders attributed this to investors trying to cover their shorts or merely getting back to the market.
Internal Revenue Service (IRS) views all cryptocurrencies as property, which means the profits from transactions go through the capital gains tax system. According to Tom Lee, head of research at Fundstrat Global Advisors, Bitcoin increased in value by over 1,300% last year leaving US households owing about $25 billion tax for digital currency holdings.
Co-founder of Blockchain Capital, Spencer Bogart, commented to CNBC in an interview:
“Tax-selling has been a significant factor in downward crypto prices over the past few weeks. I would expect this downward pressure to abate after tax day.”
On Sunday, April 15th Lee said that Bitcoin might hit a similar bottom to where it was a month prior to hitting $20,000 in 2017.
CRYPTO: Where was #BTC 1M prior to ~$20,000 top? $5,900. In other words, BTC this year rollbacked prices similar to what happened in 2014/15. Could be same bottom as the 2014/15 bottom. Also, selling related to capital gains taxes in US should be lifting as tax day is 4/17. pic.twitter.com/AyOgKPoR2x
— Thomas Lee (@fundstrat) April 15, 2018
However, Lee predicts that Bitcoin will reach $20,000 once more by the middle of this year and by year end it would be at $25,000. The cryptocurrency is as well expected to achieve $91,000 by early 2020.
CEO and founder of Pantera Capital Founder, Dan Morehead, said via an investor letter that the cryptocurrency, Bitcoin, in particular, is “highly likely to have exceeded $20,000 within a year.”
Tim Draper, venture capitalist and early backer of SpaceX, Skype and Tesla, predicts Bitcoin price to hit $250,000 by 2022, further forecasting that by that time, anybody using fiat as a payment option will only be laughed at.
Murray Stahl of Horizon Kinetics put forward an argument that BTC will be king, and worth all the value of the world currency as fiat money may be debased, sending prices to $361,000 per Bitcoin as per Barron’s estimate.