Bitcoin dropped more than 6 percent over two hours Monday, to below $7,000 as the April tax-filing deadline approaches.
The cryptocurrency hit a low of around $6,646.07 on Monday, according to data from CoinDesk. Bitcoin prices have fallen more than 27 percent over the past month.
Tax Related Selling
Tax-related selling has been a key driver of this month’s sell-off, according to some analysts.
Thomas Lee, head of research at Fundstrat Global Advisors, said in a report last week that U.S. households likely owe $25 billion in capital gains taxes for their cryptocurrency holdings.
To meet tax liabilities, investors are selling bitcoin, which could mean “massive” selling into U.S. dollars ahead of the April 17 tax filing deadline, Lee said.
Bitcoin prices are down more than 52 percent this year.
The entire cryptocurrency market has lost more than half its market capitalization since the beginning of this year, according to data from Coinmarketcap.
Regulatory uncertainty has been another factor in the pricing pressure.
The SEC cracked down on a fundraising technique known as initial coin offerings.
Few Days back, the SEC charged two founders of a cryptocurrency firm endorsed by boxer Floyd Mayweather with carrying out a fraudulent ICO.
Global regulators are split on how to police the cryptocurrency, which is not backed by any central bank.
The Reserve Bank of India announced last week that regulated financial institutions in India can no longer legally deal with cryptocurrencies.
Bitcoin drops below $7,000