The New Years Fears and Bitcoin Capitol Losses

briggsy (64)in #bitcoin • 7 years ago

A few weeks ago, I was having a chat with a relative about Bitcoin and what the price might look like going into the holidays and new year. There had been talk swirling in the nether regions of Bitcoin discussions about the US-based investors and their year end gains buying Bitcoin, and were now looking at their 2017 tax year and wondering how to shelter those gains.

At the time given that the rumors made perfect sense, I figured there might be a Christmas pump and then a new years eve (or close to it) dump, simply because people want to kick the tax can down the road any way they can, and shelter their gains in 2017 at the same time. I'm not psychic, but people can behave in predictable ways, especially when it comes to money. That's why big businesses employ psychology and statistics analysis to tweak their market presence just right.

The problem for the big investors is that the IRS now has records of their activity on exchanges relating to Bitcoin. That leaves them in a bind. They could move it over to Monero and then tell the IRS that they lost their bitcoins, or someone stole them. Of course, that is a last resort option because you would have to prove it by seeking an investigation. Anyone who "loses" wealth without trying to get it back is covering up something in many cases.

My instinct says that the easiest way to depreciate capital gains on Bitcoin, is to simply drop the price through a coordinated effort. Drop the price low enough until January 1st, and suddenly you don't owe capital gains, or at least as much, depending on when you bought in.

The laws are different in every country. Where I live, you have to declare Bitcoin holdings if they are worth more than 100,000 dollars, but you aren't taxed until you cash out. But, the same principal applies; help push the price down and you can declare less for your personal y/e (year end) profit and loss, especially if someone is a professional trader with a profit and loss being declared for business.

So why does this all matter?

Because if I were to bet money, I would say that Bitcoin could easily just keep dropping in price until January 1st. This isn't because people are selling like they've lost their mind (necessarily) - although you can be sure a lot of weak hands would panic if Bitcoin were to drop to say 8000 dollars - but it could simply be a coordinated effort of enough people with the same interests who hold a lot of Bitcoin.

I don't claim to understand the politics at play, but you can be sure that a lot of fiat or USDT is passing hands if a coordinated effort is indeed underway. I simply cannot believe that smart investors who want to shrink their gains for 2017 would not want to see a year end bear drop happening. I don't think it's a conspiracy. I don't even believe there is much to it, except that big holders of Bitcoin can use a price drop to their advantage. The only thing that stands in their way would be swarms of small investors buying into the Dip. This is easily thwarted though by publishing FUD everywhere in the media. Lot's of people are swayed by depressing headlines.

Anyway, I don't know more than the next person if Bitcoin is going to dive below 10k before January 1st 2018. Logically, it makes no sense for US-based holders to want the price to skyrocket before then, at least those who are transparently open to the IRS through the exchanges.