Cryptocurrencies Rally, Bitcoin (BTC) Eclipses $7000

Cryptocurrencies have opened April on a strong note. The big four are posting a positive start to the trading week, led by Bitcoin (BTC). Crypto bulls have been hard to find over the past three months. Selling on news of pending regulation and questions surrounding the U.S. tax season have been daily norms. No doubt, investors holding cryptocurrencies are desperately seeking some relief from an exceptionally brutal stretch.

The last 24 hours have brought some optimism to the cryptos. Here are the performance metrics:

Coin                              Percentage Gain

Bitcoin (BTC)                     +3.1%

Bitcoin Cash (BCH)           +1.5%

Ethereum (ETH)                +3.5%

Litecoin (LTC)                    +3.3%

BTC has made a nice recovery after last week’s dismal performance. As of this writing, BTC has rallied above $7000. Is this the first step in a return to $10,000? We are certainly going to find out.

Tax Time

The U.S. Federal Income Tax deadline is a few weeks away and questions surrounding cryptocurrency transactions are coming to the forefront. Many U.S. cryptocurrency investors have operated under the assumption that transactions are confidential and will not be scrutinized by the U.S. Treasury Department. This is proving to be far from the truth.

Public statements from the U.S. Treasury and IRS have outlined plans to go after U.S. residents and non-residents subject to tax liability on cryptocurrency gains. Exchanges such as Coinbase are being pressured to turn over financial records, specifically from 2017.

Overview

No one really knows how the new additions to the tax code are going to be enforced. However, even the notion of taxing cryptocurrencies is having a dramatic impact on current valuations. In the event that audits, levies, and other actions are taken against cryptocurrency investors, we could be looking at a further depreciation of the entire asset class.