Tom Lee, a well-known bitcoin bull and the only Wall Street analyst covering the cryptocurrency, recently argued that US households likely owe about $25 billion in capital gains taxes for their cryptocurrency investments. This could see the market get hit with “massive” selling pressure until April 17, the tax filing deadline.

According to CNBC Tom Lee, the cofounder of Fundstrat Global Advisors, estimates that about 20 percent of all capital gains tax payments in the US are related to bitcoin investments. This, to him, is why the Internal Revenue Service (IRS) “cares so much” about collecting cryptocurrency-related taxes.

This large amount is reportedly forcing investors to sell some of their cryptocurrency holdings, even during a bearish market, as a way to raise money to pay the IRS. Lee noted that some investors likely bought bitcoin and ethereum to sell their altcoins, and then dumped these cryptocurrencies as tax season approached. He added:

“Additionally, we believe there is selling pressure by crypto exchanges who are subject to income tax in U.S. jurisdictions. Many exchanges have net income in 2017 [of more than] $1 billion and keep working capital in [bitcoin or ethereum] not USD — hence, to meet these tax liabilities, are selling BTC/ETH.”

Tom Lee

The Wall Street analyst estimated US cryptocurrency investors have a tax liability of $25 billion based on the historical tendency US households have to realize 52 percent of capital gains per year. Last year, bitcoin surged from little under $1,000 to a mid-December all-time high above $19,000. Since then the cryptocurrency tumbled by more than 64 percent as it is currently trading at $6,790, according to data from CryptoCompare.

Given this analysis, Lee believes selling pressure should alleviate after April 17, the day US tax returns for 2017 are due. Nevertheless, he notes other factors could drive bitcoin’s price down.

Pointing to his Bitcoin Misery Index (BMI), he said:

“Regulatory headline risk is still substantial. And sentiment remains awful, as measured by our bitcoin misery index, which is still reading misery.”

Tom Lee

Lee maintained his bitcoin price target of $20,000 by the middle of this year, and sees it rise to $25,000 by year-end. Ethereum, reports suggest, is expected to quadruple to $1,500 by the middle of the year, and hit $1,900 by year-end. As covered, the Wall Street analyst has predicted bitcoin will hit $91,000 by March 2020.

While his predictions may seem too good to be true at this point, Lee has in the past used historical evidence to argue that hodling bitcoin makes sense, as according to him bitcoin investors see full-year gains in only nine days.