- U.S. households likely owe $25 billion in capital gains taxes for their cryptocurrency holdings, Thomas Lee, head of research at Fundstrat Global Advisors, says in a Thursday report.
- Last year, bitcoin soared more than 13 times in price and hit an all-time high above $19,000 in mid-December. It remains about 450 percent higher over the last 12 months.
- Tax-related selling would add to bitcoin’s tough start to the year.
U.S. households likely owe $25 billion in capital gains taxes for their cryptocurrency holdings, which could result in “massive” selling of the digital currencies into U.S. dollars by the mid-April tax filing deadline, one Wall Street analyst said.
“This is a massive outflow from crypto to USD and historical estimates are each $1 of USD outflow is $20-$25 impact on crypto market value,” Thomas Lee, head of research at Fundstrat Global Advisors, said in a Thursday report. Formerly chief equity strategist at J.P. Morgan Chase, Lee is the only major Wall Street analyst to formally cover bitcoin and other cryptocurrencies.
“Additionally, we believe there is selling pressure by crypto exchanges who are subject to income tax in U.S. jurisdictions,” Lee said. “Many exchanges have net income in 2017 [of more than] $1 billion and keep working capital in [bitcoin]/[ethereum], not USD — hence, to meet these tax liabilities, are selling BTC/ETH.”
Bitcoin performance over the last 12 months