Americans may owe $25 billion in Crypto Taxes — but how much will they report?

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The price of bitcoin soared by 1,221% in 2017, reaching nearly $20,000 in December—and making a lot of people rich, if they sold at the right time.

Now Tom Lee, a market strategist with Fundstrat Global Advisors, estimates that US households have about $25 billion in tax liability from cryptocurrency gains in 2017. (The IRS classifies virtual currency as property, so it taxes it as capital gains.)

Lee arrives at his $25 billion estimate this way: The overall cryptocurrency market gained $590 billion in value in 2017; Lee figures that 30% of crypto holders were in the US, totaling $187 billion in gained value; US households realize an average 52% of capital gains each year, and Lee applies the same ratio to crypto, yielding $92 billion in US taxable crypto gains; average capital gains tax is 27%, which gives you $25 billion in taxes owed from crypto gains.

That math obviously relies heavily on ballpark estimates, but it has the air of accuracy to it. Indeed, if you look at charts showing current bitcoin trading activity by volume, 30% of global trading activity is happening on US exchanges, and 37% of trades are being transacted in USD.

But Lee then posits that the recent selloff in bitcoin (down 28% in the past month, down 54% in 2018) is fueled by people selling crypto in order to get liquid funds to pay taxes on their 2017 crypto gains. “We believe selling pressures have been amplified by capital gains tax-related selling this year,” Lee writes. “If this is correct, we should see improved dynamics after April 15th.”

That’s a big leap, for one big reason: the majority of Americans who sold off crypto in 2017 at a gain are unlikely to report it on their taxes this year.