After a bumpy start to 2018 that saw the total cryptocurrency market cap lose nearly $600 billion in value, various digital currencies are finally getting back up on their feet.
Following Bitcoin’s lead, most cryptocurrencies have been steadily recovering most of the market capitalization that they lost in the last few months. In wake of the lightning bull run that Bitcoin experienced in the middle of this week – increasing by almost $1,000 in value within an hour (refer below) – the world’s largest cryptocurrency crossed the $8,000 mark for the first time in April.
Bitcoin’s rise is reflected by the other altcoins as well. Ethereum increased by over 36% this week to regain its $500 price tag. Ripple’s price rebounded from sub-50 cent prices to almost $0.70, increasing by 40% in a matter of days. The total market cap of all cryptocurrencies is now $338 billion, up by over $80 billion from its value last week.
Nevertheless, it is still hard to tell whether cryptocurrencies can sustain their bull run through April. For starters, the price of Bitcoin is still less than half of its all-time high of $19,800, which was achieved in last December. According to most traders, we can only expect another all-time high if Bitcoin surpasses the $12,000 mark. However, it is without a doubt that by increasing by over $1,500 this week, Bitcoin is in its early stages of recovery. Moreover, if the current momentum of the market continues, it is possible that the total crypto market cap will hit $400 billion by the end of the month, if not earlier.
Bulls Reappearing Due to End of Tax Season
Earlier this month, Wall Street analyst Tom Lee hypothesized that the recent cryptocurrency “crash” was due to exchanges and individual investors cashing out on their holdings in light of the 2018 tax season.
“Additionally, we believe there is selling pressure by crypto exchanges who are subject to income tax in U.S. jurisdictions,” Lee said. “Many exchanges have net income in 2017 [of more than] $1 billion and keep working capital in [Bitcoin]/[Ethereum], not USD — hence, to meet these tax liabilities, are selling BTC/ETH.”
Therefore, since the tax season is now over, it isn’t surprising that most cryptocurrencies are experiencing an inflation in value since people now have the ability to invest more with their tax returns. These sentiments are also echoed by Ryan Taylor, CEO of the cryptocurrency software company Dash Core:
“The selling pressure associated with tax day has subsided right now. As people get their tax returns, there may be new money entering the market.”