Tax season in the U.S. is here, and many citizens who use or hold cryptocurrencies are clamoring around trying to figure out how to file their capital gains taxes. According to reports from Fundstrat’s analyst Tom Lee, cryptocurrencies represent roughly 20 percent of last years U.S. capital gains.
Also Read: Emin Gün Sirer Discusses Cryptocurrency Academics and Proof-of-Stake
Cryptocurrency Selling Pressure Stemming from Tax-Related Sales
Cryptocurrencies were a great investment last year, and the tax man is interested in individuals who cashed out into fiat raking in some gains. The reason for this is because the U.S. Internal Revenue Service (IRS) treats cryptocurrencies as a commodity-like investment vehicle, which is subject to the nation’s tax laws. Further, nearly every bitcoin or alternative digital currency transactions, which includes the collection of airdrops, trades, spending, and almost every type of exchange is considered a taxable event for U.S. citizens.
Fundstrat’s Tom Lee believes Americans owe a lot of money for cryptocurrency investments in 2017, with owed capital gains topping roughly $25 billion USD. This means out of all the traditional investment vehicles like stocks, equities, and precious metals cryptocurrency-related capital gains taxes is estimated to be over 20 percent according to Lee’s findings. Lee details that the current digital currency bear market may have been primed by tax-related sales this year.
“We believe selling pressures have been amplified by capital gains tax-related selling this year,” Lee explains in his memo.
If this is correct, we should see improved dynamics after April 15. We still like bitcoin and large-caps and while we believe the bear market for altcoins is largely over, we do not see an upside for altcoins until mid-August.
Tom Lee is well
