Is U.S. Tax Season Driving The Cryptocurrency Crash?

Posted Wednesday, March 14, 2018 by
Shain Vernier • 2 min read

The cryptocurrency universe continues to shake beneath news of coming regulation. Led by the descent of Bitcoin (BTC), investors are beginning to question relative valuations of the entire asset class. Currently, BTC is trading in the neighborhood of $8500 and threatening to fall further.

BTC tax
Will The U.S. Tax Season Alarm Cryptocurrency Investors?

If you are in the U.S. and an active trader of cryptocurrencies, then you have likely received an email from your exchange regarding the coming U.S. Income Tax season. One of the largest U.S.-based cryptocurrency exchanges, Coinbase, has sent out a mailer breaking down potential tax liabilities for customers.

Personally, I received the email from Coinbase a few days ago. Coinbase has a user-friendly platform for downloading profit and loss statements attributable to trading operations. It is a nice feature for calculating investment appreciation and possible tax liabilities.

However, this is a new item and one that screams of governmental oversight. At least for those of us in the United States, full-blown cryptocurrency regulation appears inevitable.

More Strife For The Cryptos

It is another poor day for BTC and cryptocurrencies in general. Here are the 24-hour performance metrics for the big four:

Coin                                 Percentage Decline (Approximate)

Bitcoin (BTC)                                    -9.5%

Bitcoin Cash (BCH)                          -9.5%

Ethereum (ETH)                              -10.0%

Litecoin (LTC)                                   -8.0%


From a practical standpoint, the recent slide in cryptocurrencies is understandable. A good portion of participants in these markets are millennials from the United States. Given the tax questions surrounding a BTC wallet worth tens of thousands of dollars, many newbies to the financial markets may be a bit panicked.

It stands to reason that at $950 dollars per BTC, the tax liability is not as serious as $10,000 per BTC. For some reason, the notion that the recent BTC decline is related to U.S. tax implications rings true. Are investors bailing out of the cryptocurrency markets in fear of Uncle Sam? If we see a post-April 15 rally, then we will know for sure.

As the old saying goes, the only two sure things in life are “death and taxes.” The new class of cryptocurrency millionaires may be on the verge of learning this lesson for the first time.

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