Tom Lee has predicted that there will be a massive outflow of cryptocurrency to fiat in its lead up to tax in the United States. On Thursday Lee noted that since most US households pay an estimated $25 billion in Capital gains taxes I the crypto holdings and more to that exchanges owe income taxes meaning that both the exchanges and households will have to sell their cryptocurrency to pay the United States government.
According to Tom Lee:
“It’s true that there is pressure in selling cryptocurrency through the exchanges because they are subject to income tax by the US laws. Many of the exchanges made more than $1 billion in net income, and since they keep their working capital in digital currencies and not in the USD hence to meet this tax liabilities, they must sell the digital currencies.”
The cryptocurrency markets have lost more than 50% of their value in the first three months of 2018 which have made Bitcoin have its worst year story in history. However, there are people who capitalized on the currencies growth up to December 2017 which saw Bitcoin’s price move up to $20,000. However, those who made the gains are not off the hook yet because they still have to pay capital gains tax on those earnings.
Lee created a Bitcoin Misery Index in mid-March showing how BTC holders are having a miserable time at the current price. According to the Bitcoin Misery Index: “It’s true that regulatory headline since they are still substantial and the current prices have remained undesirable which has led to misery.” Lee concluded by stating that he expects Bitcoin to find its footing after the US tax day which is on April 17th.
The social media strategist has in the recently predicted that Bitcoin will hit $91,000 by March of 2020, but this will be based on Bitcoin’s recovery process after the dip markets which have seen it lose more than half of its value within 3 months. Tom Lee has however kept on changing his predictions since in January he had predicted that the price of Bitcoin would hit more $25, 0000 by the end of 2018.