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Pantera Capital believes that a reason for crypto sell-off is tax-related

Updated: Sep 2, 2024
Published: Feb 24, 2022
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Pantera Capital, the firm behind the first crypto fund in the United States, has released a report which says that around $1.4 trillion of cryptocurrency capital gains were made in 2021, and the recent sell-off period is a result of people taking profits. It also said that the incoming Tax Day for America on April 18th might affect cryptocurrencies prices. 

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Pantera Capital releases a detailed report

Pantera Capital talked about the cryptocurrency market and taxes in its recent February Blockchain Letter, which confirmed that taxes are a major reason why cryptocurrency prices are falling. The firm pointed out that "after the three previous big run-ups – 2013, 2017, and 2020 – and this one, 2021 – bitcoin peaked 35 days before Tax Day and then declined to a local trough as investors sold off assets to cover taxes accrued in 2020.

Pantera Capital believes that a similar situation might be witnessed this year as well when Tax Day approaches on April 18th. The firm said that since many 'new investors' are 'all-in' on cryptocurrencies, they sell off their cryptocurrencies to pay off their taxes because liquidation is the only choice they have. 

The firm also added that in order to meet the tax requirements from the new government policies, a 'decent chunk' of capital might've been erased from the market. 

Blockchain Fund

Pantera Capital has added an additional closing for the Pantera Blockchain Fund, which will be March 1st. The Fund is a "new 'all-in-one' wrapper for the entire spectrum of blockchain assets," and the firm believes that this Fund will be the "most efficient way to get exposure to the blockchain as an asset class."

The Fund has invested in nearly 41 early-stage token projects, and as noted by Cryptonary, the firm had also invested in Arbitrum One, an Ethereum scaling solution developer Off Chain Labs. Others investors in the field included Polychain Capital, Alameda Research, Redpoint Ventures, Ribit Capital, and Mark Cuban.

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