Cardano’s co-founder Charles Hoskinson made an analogy about the United States Internal Revenue Service (IRS) hurting taxpayers in the country. In a social media post on X (formerly Twitter), Hoskinson described the present state of the crypto market likening it to the historical sell-offs that take place when taxes are due.
“Every year, there is a large asset sell-off for April 15th as taxes are due. Then the IRS (represented as Ivan the Terrible here) ponders why it killed its own son (you the taxpayers).”
Hoskinson’s Tax Deadline Sell-offs
The crypto market faces plunging figures in the last 24 hours due to macroeconomic factors and geopolitical tensions as investors move funds from risky assets. Historically, market analysts have said the US tax due date, April 15 tanks crypto assets.
As a result, the stock has seen resistance with choppy trades hovering in the weeks leading to the deadline. The cryptocurrency market now trades similarly to stocks with massive outflows recorded in the last 24 hours. This correlation can be traced back to 2019 but is now heightened with the influx of traditional investors in cryptocurrencies.
In Q4 2023, traditional investors increased their exposure to the market on the back of spot Bitcoin (BTC) ETF applications attracting wider gains to the asset.
Analyst Explains Trend
According to Fundstrat’s Tom Lee, there might be some artificial sell pressure on stocks sparked by the tax deadline. An analysis shows that when the market goes bullish, it declines leading to tax day. This can be seen through stocks and crypto at the moment as both markets rallied last year for various reasons.
Lee pinned the reason for the bearish market movements on investors raising cash to pay for capital gains accruing from the previous years.
“The reason this relationship exists is that investors need to raise cash to pay capital gains. Hence, stocks come under selling pressure into tax day.”
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Read More: Cardano’s Hoskinson Makes Analogy on IRS Killing Taxpayers Amid Sell-offs