Bitcoin (BTC) has seen a strong and consistent rise over the past few days, with the recent decline to a low of $ 6,800 followed closely by a massive price increase allowing it to reach a position in the lower $ 8,000 range.
There have been plenty of different narratives about what might be behind this recent movement, but some investors now point out that US investor taxes may play a role in the recent rally, which may make sense when they put into historical context.
Are the taxes the unlikely suspects behind the recent Bitcoin rally?
Bitcoin ended 2019 on a positive note, climbing almost 100% from where it started this year. However, not all BTC investors in 2019 ended the year with profits, as the crypto did reach $ 13,800 at one point.
All investors who bought Bitcoin over roughly $ 7,200 – where BTC ended the year – likely suffered YTD losses, which means their cryptocurrency sale may win them a tax write-off in 2019.
Pete Rizzo, a popular crypto industry reporter, revealed this possibility in a recent tweet that said:
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“What if all this #BTC acquisition is just … investors who sold EOY for tax purposes back to the opening of the year …”
What if all this #BTC buying is just … Investors who sold EOY for tax purposes back to opening this year …
Although BTC plummeted during December 31 and continued to plunge lower until January 2, facilitating a low of $ 6,800, this theory could be supported by Bitcoin’s price action.
If those investors were selling their holdings at a loss to wipe out tax, they probably would have bought back into their Bitcoin roles early in the new year, and that could have been the spark that started the latest trend.
Does this theory make sense?
Other theories as to what was the momentum behind the recent rally focused heavily on technical developments, as well as the basics pertaining to Bitcoin’s potential as a safe haven investment.