If you haven't noticed, the prices of cryptocurrencies have been in a pretty steady downtrend for close to 3 months now.

Which is not really that surprising when prices were up something like 20,000% across the board for many in the space.

However, the continued, and somewhat relentless selling as of late might be seen as somewhat of a surprise to some observers.

Myself, slightly included.

The current selling could be blamed on a number of things.

From increased regulation from just about everywhere, to the latest FUD news story of the day.

However, in my opinion, the two biggest drain on prices are currently coming from the SEC (Securities and Exchange Commission) and their lack of clarity on what is a security and what isn't.

Then also, the tax obligations facing many in the crypto space.

The latter possibly affecting prices more than anything else currently.

Especially when you consider that the US is either biggest or second biggest cryptocurrency market place, depending on which day you check.

People in the crypto space have enjoyed mostly tax free trading of their cryptocurrencies for the better part of 5 years now.

That all changed, however, when Coinbase was forced to turn over data on anyone that had traded over $20k worth of cryptocurrency per year in the years between 2012 and 2015.

That combined with increased commentary from the IRS saying that anytime a cryptocurrency is exchanged for another cryptocurrency is a taxable event.

The like-kind possible loop-hole has also been officially closed as the definition was recently changed to only include hard assets, like real-estate.

Which means we likely have people needing to cash out in order to properly pay taxes from years prior, some of them possibly for the very first time.

Combine that with the fact that anyone in cryptocurrency today knows that any realized gains must be reported to the IRS means that markets now are factoring in tax consequences that were likely not part of the equation before.

(Source: https://mpumalanganews.co.za/180924/always-bad/)

However, this is not all bad news.

Since markets are no longer efficient markets, yes I use that term talking about the fact that people now are forced to sell cryptocurrencies to raise cash in order to pay their taxes, there is the chance to pick up inefficiently priced coins.

In times like we have today when bitcoin and the like are likely being sold not based on any fundamental reasons but instead on the need to raise cash, it presents wonderful buying opportunities for those eager to take coins off their hands.

I have no proof that this is the single biggest driver of the selling, but it makes much more sense than what some of the talking heads out there are saying about Google, Facebook, and now Twitter banning ICO ads as the cause for the current weakness.

I've personally been picking up some coins for weeks now.

From that perspective, I am welcoming the inefficient forced selling by some as it brings better entry points.

Now, we just have to wait until we get passed April 19th!

Stay informed my friends.

Image Source:

https://www.kiplinger.com/article/taxes/T056-C000-S001-where-clinton-and-trump-stand-on-taxes.html

Follow me: @jrcornel