There are a number of theories for Bitcoin’s price decline since the cryptocurrency market peaks of December 2017, including the Mt Gox sell-off, increased regulatory scrutiny, and imminent tax deadlines. Less supportive parties declared the boom was over, but some experts including Fundstrat’s Tom Lee believe its barely begun.
Lee is Head of Research for Fundstrat Global Advisors and a prominent figure in both traditional trading and cryptocurrency markets. Lee predicted tax loss selling could reduce Bitcoin’s market capitalization by $20 to $25 per $1 of Bitcoin sold. As the April 17th tax deadline has passed Lee believes three critical influences on Bitcoin’s price have now ended, leaving Bitcoin ready to hit $20,000 by the middle of the year. He also forecasts Bitcoin will hit $25,000 by the end of the year.
Chart Source: Fundstrat Global Advisors/Forbes
Some reports[1], however, indicate the number of investors filing cryptocurrency gains is low which could dispute this theory. Bitcoin buyers may also have been hesitating, waiting for the impact of potential tax loss selling to pass. If investors have indeed sold some of their holdings to cash in and pay pending tax bills, that period should now be over.
A cryptocurrency hedge fund with $800 million in assets, Pantera Capital, also connected the deadline for filing taxes in the US to selling pressure in a letter[2] to investors:
“I could imagine that a portion of the selling pressure on the market, in general, has been unintended tax positions. Imagine a trader actively buying and selling BTC, ETH, XRP, etc,” Pantera said. “Great year. Made a ton of money. Kept it all in the markets. Come the spring their accountants tell them that every sale at a
