There are a multitude of posts explaining why Bitcoin crashed, how next year will be a flip for the crypto market and then there are the negatives saying “Ha! We told you this was going to happen.”
Don’t worry we are not from the negative team. However, what we actually would like to do is draw a line between the positives and the negatives while focusing on real reasons.
Blockchain and Bitcoin has seen alot of movement this year, both financially and in terms of regulation. We would love to decentralise our world but the “sad truth” is that we are still entities beneath a central governing body. The “sad truth” also consists of large central entities and institutions which saw the rise and the fall of Bitcoin. This might play a beneficial role towards flipping the market as institutional investments and money flows in.
Or that is just a big wild imagination we develop, trying to soothe ourselves. Then we come to a harsh reality (that can happen) that we are going to stay as pawns for a central authority… (Time to snuggle up in a blanket and cry)
Now that was something I got off my head, lets focus on a reason now. And please keep in mind that this is a “can be” reason:
Bitcoin investors in the United States are selling off their crypto to pay off capital gain tax.
The initial investors for the cryptocurrency are facing huge capital gain taxes for the profit booked in 2017. Reports show a quick sell now before April Tax filing.
You’ll recall that the IRS made an announcement in 2014 that “cryptocurrencies are defined as property and not currency.”
The CEO of ARK Invest said in a quote:
“Those who have never paid taxes before are shocked. Many people gained a lot from cryptocurrency last year but currently, do not have enough cryptocurrency to pay taxes for their last year’s gains.”
In addition to that statement, the Founder of onlinetaxman, Vincenzo Villamena stated that “people have realized that they are stuck with large tax bills now, they are either preparing to pay or selling off the cryptocurrency.”
How Does Selling Off Cryptocurrency Help People Avoid Paying Huge Taxes?
If an individual trades (buys/ sells) Bitcoin within the same year, the income is taxable under the “short term capital gains” tax ruling which can be as high as 39 percent, depending on the tax bracket.
That is not all, Airdrops and Bitcoin Mining also fall under a taxable category now although they are taxed as ordinary income *whew*. However, when a person holds on to Bitcoin for more than a year before selling, it will only be liable for what the IRS refers to as long-term capital gains.
Keep the revolution going on folks !