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, Bitcoin performance at tax time, Forex-News, Forex-News
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Bitcoin performance at tax time

, Bitcoin performance at tax time, Forex-News, Forex-News

, Bitcoin performance at tax time, Forex-News, Forex-News

January ushers in a new tax season. In fact, it is a time when Bitcoin underperforms, compared to the other months of the year. But, some analysts say it may not be a coincidence.

By the way, from 2014 to 2020, Bitcoin was down on four out of seven January and six out of seven March. In this regard, Delphi Digital indicated that the average losses for those months were 5.24% and 12.59%, respectively.

Bitcoin in tax season

In these circumstances, Paul Burlage, an analyst at Delphi Digital stated: “Going into tax season, it is a period where Bitcoin has historically underperformed other months. This is by no means independently predictive, but it is important to keep in mind».

In particular, according to Delphi Digital’s January Bitcoin Outlook report, one of the main reasons for the Bitcoin price drop is that:

«Those investors and traders who made significant profits trading various crypto assets last year. They will likely have to sell at least a portion of their holdings to cover expected tax liabilities».

Also, Kevin Kelly, Co-Founder and Head of Global Macro at Delphi Digital, said: “It is difficult to pin down exactly how much sales pressure to expect. And different jurisdictions that treat capital gains more favorably than others».

“But, Bitcoin added more than $ 400 billion to its total market value last year.”

Adding: «A portion of those returns accrued for speculators and traders who may have already made some profits or accumulated them in other corners of the crypto market, triggering taxable events.».

Position of the Internal Revenue Service

For its part, the Internal Revenue Service (IRS) published updated instructions with answers to questions related to virtual currency. All this, during the tax filing of the taxpayers at the end of December.

It is true that compared to 2019, the 2020 tax form places, right on the first page, a yes or no question: «At any time during 2020, did you receive, sell, send, exchange, or acquire any financial interest in the virtual currency?».

As a curious fact, the version updated to December 31, 2020, clarifies what the term “virtual currency” covers. And it makes cryptocurrency purchases subject to this question.

In particular, the IRS guidance also clarifies that transactions involving “virtual currency” will include the “purchase of virtual currency.”

This means that if you bought cryptocurrencies during 2020, you will have to check ‘yes’ to this question on page 1.

Future taxes on unrealized gains?

Currently, there are discussions in the market about Janet Yellen’s proposal, on taxing unrealized capital gains.

For example, one of the proposals includes the collection of long-term capital gains taxes. And dividends rated at the ordinary income tax rate of 39.6% on income greater than $ 1 million.

In closing, John Todaro, director of institutional research at cryptocurrency analytics firm TradeBlock, said: “The unrealized capital gains tax proposals would impose a degree of impact on investors».

I retire with this phrase by José Cecilio del Valle: «The government that demands a tax increase with one hand. Must with the other seek the increase of wealth».

, Bitcoin performance at tax time, Forex-News, Forex-News

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, Bitcoin performance at tax time, Forex-News, Forex-News

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