After Bitcoin rallied from $6,300 to $8,400 on July 23, prices slumped.
That’s because investors have grown increasingly concerned about potential tax crackdowns.
South Korea for example is considering a law that would end tax benefits for crypto exchanges.
"While crypto markets have seen rapid growth, such trading platforms don’t seem to be well-enough prepared in terms of security," said Hong Seong-ki, head of the country's cryptocurrency response team South Services Commission, as quoted by Forbes "We’re trying to legislate the most urgent and important things first, aiming for money-laundering prevention and investor protection. The bill should be passed as soon as possible."
At the moment, startups and small and medium enterprises (SME) can apply for a deduction of 50 to 100% tax in the first five years, and five to 30% after in South Korea.
Revisions to current law will be presented to the National Assembly by August 31 for parliamentary debate. This will be followed by parliamentary debate and a vote on whether or not the bill should be put into effect.
While that’s causing a near-term hiccup for the coin, the long-term opportunity is still present.
Despite recent negativity, bulls see significant upside ahead for Bitcoin prices.
Pantera Capital believes Bitcoin could hit $21,000 by the end of 2018.
It believes the coin could skyrocket to $67,500 by 2019.
Morgan Creek Capital Management’s Mark Yusko is even sticking with a year-end prediction of $25,000. He expects a $75,000 value by 2020, $200,000 by 2022, and $500,000 by 2024. “Such predictions rank Yusko among the most optimistic of bitcoin bulls, but he says his targets are justified due to the power of the “network effect” — the theory that a communications network becomes increasingly valuable as it onboards more users,” as quoted by Bitcoin Opinion.
We also have to consider that the U.S. SEC could approve an ETF by September 2018.
This comes after a request filed by New York-based, VanEck, and also blockchain platform, SolidX. “If approved, a Bitcoin ETF would mean people are be able to buy into Bitcoin without having to deal with clunky exchanges that often struggle with cumbersome regulation and lack of public trust,” says Forbes.