As the end of U.S. tax season approaches, Bitcoin bulls believe that the digital currency will finally begin its next run to prices over $20,000. But is it really going to run?
The past few months have been rough for cryptocurrency investors, with the cryptocurrency market cap plummeting from a high of $820 billion all the way down to $250 billion. This came after the mainstream media began to pile onto cryptocurrencies in a manner that was far from positive.
Despite a bearish Q1 2018, the sentiment portrayed by the public and mainstream media sources appears to be shifting. With a collective – if not tentative – sigh of relief, investors are getting excited once again as they have seen strength return to the cryptocurrency market, with Bitcoin prices climbing over 20% in a single week.
Cryptocurrency bulls, along with some veterans in the industry, seem to be preparing for the next bull market, like the one seen in late 2017.
Tom Lee, co-founder of Fundstrat, has projected that Bitcoin will reach over $25,000 by the end of the year, 25% higher than the prices seen during the 2017 peak in December. Along with this speculation, bullish signals have returned, in the form of positive sentiment, which has begun to pile up.
Could Taxes Really Be The Reason For The Selloff?
Spencer Bogart, a partner at Blockchain capital, took a stab at reasons for the market decline by stating:
Tax-selling has been a significant factor in downward crypto prices over the past few weeks. I would expect this downward pressure to abate after tax day.
With the long-awaited passing of the U.S. tax day, bullish investors expect that this will relieve a large majority of selling pressure seen on the market.
According to Tom Lee, an estimated $25 billion is owed to the IRS for “realized gains” for U.S. households last year. To cover the taxes required for these cryptocurrency gains, many have begun selling their cryptocurrencies for fiat currencies in order to procure the funds needed to pay their tax bills.
The man behind the #bitcoin tax selling theory, @fundstrat's Tom Lee, breaks down why the #cryptocurrency is set for a big rally pic.twitter.com/Ulv5wqlfab
— CNBC's Fast Money (@CNBCFastMoney) April 16, 2018
Along with this speculation about taxes, there have been other positive indicators showing that Bitcoin is ready for more public consumption. The SEC recently indicated that they will be taking a second look at Bitcoin ETFs. It is now clear that this would not be any old ETF. It would be a widespread, highly liquid Bitcoin ETF which would reach millions of new investors.
Along with a public ETF, large financial organizations such as Venrock and the Soros Fund have announced their plans to make investments in this evolving industry. For those who are not in the know, Venrock is a prominent venture capital firm which has invested over $2.5 Billion dollars in companies like Intel and Apple during their infancies. Venrock is poised to pour large sums of money into blockchain related startups in a move which obviously emanates classic venture capitalism.
Venrock partner David Pakman stated:
We wanted to partner with this team that has been making investments and actually helping to architect a number of different crypto economies and crypto token-based projects.
It is clear that with this move into the space that Venrock is willing to invest in companies which will not only grow the blockchain space but the cryptocurrency space along with it.
However, don’t count out George Soros’ involvement, who has extensive billion dollar funds with his ownership stake in these firms accounting to his over $8 Billion net worth.
George Soros is rather infamous for his currency manipulation tactics when he shorted over $10 Billion dollars worth of British pounds in 1992. There is some concern in within the crypto community that he may do the same with Bitcoin, as short selling Bitcoin has become popular since the price peak in December of last year. Some may see this as a negative sign but for now, it seems that any financial involvement is seen as positive news.
Tim Draper, famous venture capitalist and Bitcoin proponent, is even more optimistic about the digital currency’s future, predicting that it will reach over $250,000 by 2022.
On April 12th, Draper confidently announced:
I’m thinking $250,000 a bitcoin by 2022… Believe it, it’s going to happen; they’re going to think you’re crazy but believe it, it’s happening, it’s going to be awesome!
These bullish signals, coupled with increased media presence, might be indicators that Bitcoin is getting ramped up for another price surge that will put cryptocurrencies back into the public eye once again. As things begin to pick up, we may see that Mr.Draper’s statement won’t be as outlandish as it currently seems.
What are your price predictions for the price of Bitcoin and the cryptocurrency market cap as a whole? We would love to know, so let us know in the comments down below!
Images Courtesy of CoinMarketCap, Internet Week New York/Flickr, Wikimedia Commons