Charles Hoskinson Draws IRS Analogy

Charles Hoskinson’s comparison highlights the significant sell-offs in the market preceding tax deadlines, particularly around April 15th.

Charles Hoskinson, a co-founder of Cardano, drew an analogy between the Internal Revenue Service (IRS) of the United States and the harm it causes to American taxpayers.

Charles Hoskinson’s Insights on Market Decline

Charles Hoskinson, in a social media post on X (formerly Twitter), compared the current condition of the cryptocurrency market to the historical phenomenon of sell-offs that occur in anticipation of tax obligations. 

“On April 15th, each year, there is a significant sell-off of assets due to the imposition of taxes.” The IRS, portrayed here as Ivan the Terrible, then considers the motives behind the murder of its son, namely the taxpayers.

Due to geopolitical tensions and macroeconomic factors, the cryptocurrency market has experienced precipitous declines over the past twenty-four hours, as investors withdraw capital from riskier assets.

In the past, market analysts have predicted that the 15th of April, the deadline for US tax returns, would devastate cryptocurrencies.

Consequently, the stock has encountered resistance in the weeks preceding the deadline, marked by turbulent trading.

The cryptocurrency market is currently behaving similarly to the stock market, as significant outflows have been documented over the past twenty-four hours.

This correlation, which originated in 2019, has been further amplified by the increasing presence of conventional investors in cryptocurrencies.

Traditional investors increased their market exposure in the fourth quarter of 2023 as a result of spot Bitcoin (BTC) ETF applications, which attracted greater gains to the asset.

The tax deadline, according to Tom Lee of Fundstrat, could generate some artificial sell pressure on equities. An analysis reveals that a market decline occurs prior to tax day whenever sentiment turns favorable.

This is currently evident in the stock and cryptocurrency markets, as both rallied for various reasons last year. 

According to Lee, investors raising cash to recoup capital gains from prior years precipitated the adverse market movements.