Bitcoin ‘Underperforms’ During Tax Time: Analysis.

[Malam90]

Bitcoin's price is going down for many reasons including traders who realized gains last year selling to pay their tax bills. January ushers in a new tax season. It is also, historically, a time when bitcoin underperforms relative to the other months of the year. Some analysts say that may not be a coincidence.

From 2014 to 2020, bitcoin was down in four out of seven Januarys and six out of the past seven Marchs. According to Delphi Digital, average losses for those months were 5.24% and 12.59%, respectively.

“As we enter tax season, [a period when] bitcoin has historically underperformed other months, this by no means is predictive on a stand-alone basis but important to note,” Paul Burlage, analyst at Delphi Digital, told CoinDesk. At the press time, bitcoin’s price was at $31,571.54, down 1.22% in the past 24 hours. The No. 1 cryptocurrency by market cap fell below $30,000 briefly earlier Wednesday, according to the CoinDesk BPI.

According to Delphi Digital’s January bitcoin outlook report, one of the biggest reasons for the drop is that “those [investors and traders] who realized significant gains trading various crypto assets last year will likely have to sell at least a portion of their holdings to cover expected tax liabilities.” News link

[TomPluz]

Yes, traditionally and according to the history of Bitcoin in the past many years, the first quarter of the year is not a good period of this coin. In fact, we should be glad that its weakness showed only around the last days of January. I am sure thouhg that after the first quater, there can be another boom just waiting on the sideline. A lower-priced Bitcoin can actually entice many investors to come in or add more of what they are already holding.