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The price of Bitcoin has been fluctuating around $8,000 after a sudden spike last week that took its price from $6500 to $8000. Many analysts attributed the first-quarter sell-off in part to the fact that traders and investors were forced to sell cryptocurrency holdings to cover tax liabilities incurred in 2017.
By Tuesday evening, most tax returns will have been filed, so – aside from the few stragglers who may file for an extension – the market should see a prolonged respite from tax-based selling.
Since the beginning of 2018, majority of cryptocurrencies have followed the price trend of bitcoin amidst periods of extreme volatility. Cryptocurrencies with small market caps in comparison to bitcoin generally performed poorly against bitcoin, and the most dominant cryptocurrency in the market ended up becoming one of the best performing cryptocurrencies year-to-date.
Some analysts have been attributing this poor performance of altcoins to the rising demand for bitcoin from investors that perceive it as a safe haven asset within the global market, which is understandable given that although it is volatile, it has the highest liquidity, deepest market, and the largest number of users.
Notably when investors feel uncertain about the future and are concerned regarding the short-term trend of the market, both daytraders and long-term traders tend not to allocate their funds in assets that are highly volatile and risky. As such, over a period of four months starting in January, the market has seen major cryptocurrencies like bitcoin and Ethereum generally perform better than small cap cryptocurrencies.
At the time of writing, Bitcoin is trading at $8059, representing a market cap of $136 billion whereas the entire crypto market is at $334 billion.
Now that the tax season is wrapping up, where does Bitcoin go from here? Fundstrat Global Advisors and Pantera Capital have both issued buy recommendations on the flagship cryptocurrency, arguing that it will broach a new all-time high before the end of the year.
Top Stories from the Crypto World
1. Research shows Americans are ducking their Bitcoin Taxes
While US tax selling is said to have fueled much of the pressure in the bitcoin price till the most recent turnaround, Uncle Sam may find he has come up short when tax day rolls around on April 17. That’s because only a fraction of filers are actually reporting their crypto-fueled profits from 2017, when the cryptocurrency market ballooned in value by $590 billion.
Credit Karma Tax analyzed the most recent one-quarter of a million filers on the company’s platform and discovered only “a tiny fraction” of the group had reported bitcoin gains. In fact, results were little changed from a similar study they did in February, with findings from the studies revealing fewer than 200 of a combined 500,000 filers reported bitcoin gains.
Nonetheless, the most recent group’s results reflect “more than a 100% increase” versus the February findings. Cryptocurrency investors are already on the radar of the IRS, as evidenced by US bitcoin exchange Coinbase’s recent disclosure that it turned over thousands of records to the tax agency.
In that case, the tax agency was probing the accounts of people who traded more than $20,000 in the 2013-2015 tax years.
2. Bitmain gets go ahead for US Bitcoin mining operation
China’s crypto mining giant, Bitmain, is one step closer to establishing mining facilities in Washington state.
The Port of Walla Walla – Walla Walla county’s economic development agency – unanimously approved a land lease and purchase option that would allow Bitmain to build its new crypto mining facility. The company’s Ant Creek subsidiary will be able to lease 10 acres with an option to purchase after one year. However, an initial option for an additional 30 acre purchase was removed from the agreement.
Ant Creek still has to agree to the terms to complete the deal, local newspaper the Union Bulletin reported. If it does, it will pay approximately $4,700 per month in rent.
As a result, Walla Walla residents voiced concerns over the amount of energy the company would extract from the community, which has some of the cheapest electricity rates in North America.
It goes without saying, crypto mining companies have been quick to flock to regions with energy surpluses and inexpensive rates, but they are increasingly being met with resistance from locals.
3. German stock exchange subsidiary to release crypto trading app
Sowa Labs, a subsidiary of Germany’s second largest stock exchange Börse Stuttgart, will release a cryptocurrency trading app later this year.
The app, called Bison, will be available in September and will initially support trading of Bitcoin (BTC), Ethereum (ETC), Litecoin (LTC), and XRP. The website states that more assets will be included in the future. Bison also claims that they will charge no trading fees. The app will be available in German, and later in English.
Managing Director at Sowa Labs Dr. Ulli Spankowski said, “BISON makes trading in digital currencies easy. It is the first crypto app in the world to have a traditional stock exchange behind it.”