Bitcoin traded near $71,000 on Wednesday morning as an estimated $2.8 billion in forced crypto liquidation hit markets ahead of the IRS's April 15 deadline [1].

The selling is structural, not panicked. US investors who realized gains in 2025 — when Bitcoin ran from $60,000 to above $100,000 before the war-driven correction — owe capital gains taxes payable today. Many who did not hold cash set aside are selling crypto to cover the bill.

The fear and greed index fell to 12 — a reading classified as "extreme fear" [1]. Bitcoin has been coiling in a range between $65,000 and $73,000 for three weeks, a compression pattern that typically precedes a directional move.

The seasonal pattern is well-documented. Tax-day selling concentrates US crypto liquidation into a narrow window, temporarily depressing prices. The weeks that follow — once the forced selling clears — have historically produced rebounds. The 2024, 2023, and 2022 post-tax-day windows all saw positive returns in the 10 to 30 days following April 15.

This year carries an additional variable: geopolitical uncertainty. The Hormuz blockade has introduced correlations between energy prices and risk assets that did not exist before. Bitcoin's behavior in a genuine global shock scenario remains untested at scale.

The new IRS Form 1099-DA, introduced this year, requires exchanges to report digital asset transactions directly to the agency — closing the gap that allowed many small holders to underreport [2]. Compliance demand is broader than in prior years.

-- THEO KAPLAN, San Francisco