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The Coming Crypto Tax Bomb
Crypto taxpayers are in for a rude awakening.
We’re 16+ years into Bitcoin, yet taxpayers and CPAs still pretend that tax guidance remains unclear or even nonexistent. The IRS is gearing up for a historic wave of compliance audits targeting the crypto space, and taxpayers have no idea what they’re in for.
Last year, the IRS issued Revenue Procedure 2024-28, fundamentally changing how crypto should be tracked from a tax perspective. Providing crystal clear guidance, safe harbors for taxpayers to get compliant, and deadlines to migrate by. The rules are clear, the expectations set, with the IRS quietly positioning itself to issue a wave of compliance audits for those still with their head in the sand.
The reckoning is already beginning as we’re seeing an unprecedented amount of 6174, 6174-A, and 6173 letters being sent out by the IRS.
Typically, this time of the year is quiet. But for the past several weeks, our phone has been ringing non-stop from taxpayers receiving these notices from the IRS demanding they get compliant “or else.” And it’s not just us – crypto tax firms across the board are reporting the same activity, indicating the IRS knows taxpayers have casually engaged in crypto tax evasion, and they are here to collect what they’ve failed to collect for the past decade.
Strategically pairing Rev-Proc 24-28 with the release of the new Form 1099-DA, the IRS is positioned to blindside taxpayers and CPAs who have neglected getting compliant. The 2025 tax year will be pivotal as the IRS now has an abundance of ammunition to use in audits. Gone are the days where taxpayers could defer to defenses like “well, the guidance was unclear, so I just did my best.” The IRS has been explicit, the guidance is clear, and the penalties for non-compliance have been outlined, yet taxpayers and CPAs still assume we’re in the Wild West.
On top of this, Form 1099-DAs will be issued to both taxpayers and the IRS alike by brokers, but there’s a major catch: the form won’t include cost basis for the 2025 tax year, and will almost certainly include incorrect cost basis for years after.
That means when you transfer assets into an exchange and later sell them, the sale gets reported — but the exchange has no idea what you originally paid. In the absence of that information, the form defaults to showing a $0 cost basis. To the IRS or a traditional CPA, it looks like pure profit.
Say you buy 1 ETH for $2,200, move it to Coinbase, and sell it for $2,500. If Coinbase doesn’t have the cost basis, the form shows a $2,500 gain. Your actual gain was $300 — but unless you’ve tracked that basis yourself, the IRS won’t know. And they’ll assume the worst.
A widespread problem
This isn’t a one-off scenario. It’s going to affect hundreds of thousands of taxpayers.
If those inflated gains go uncorrected, they’ll either result in unnecessary tax owed or trigger an audit. And many CPAs won’t catch it, because most still aren’t equipped to handle crypto properly. They don’t understand how wallets work. They confuse transfers with sales. They miss staking rewards and DeFi activity entirely. Clients think their CPA is on top of it. CPAs assume the 1099 is accurate. No one’s double-checking.
That’s where things go wrong. And that’s exactly what the IRS is counting on.
The old defense — that the guidance wasn’t clear — doesn’t hold up anymore. The IRS has been direct. The expectations are spelled out. The time to fix things is NOW, before an enforcement letter is received.
Crypto isn’t some edge case anymore. Tens of millions of Americans have bought, sold, staked, lent, or transferred digital assets. Most have done a poor job keeping records. Some haven’t even tried. The result is a tax system full of underreported gains, misclassified income, inconsistent filings, and the taxman looking for revenge.
The most common mistakes aren’t complex. Transfers between wallets are flagged as sales. Assets appear on exchanges with no cost basis attached. Staking rewards and airdrops go unreported. DeFi activity is missing entirely. And year after year, taxpayers and professionals rely on CSV exports that were never designed for tax reporting in the first place.
These aren’t edge cases. They’re pervasive amongst crypto investors. And at scale, they add up to a compliance problem the IRS is now fully equipped to pursue.
This is no longer about gray areas or technicalities. It’s about a growing mismatch between how taxpayers think crypto taxes work — and how the IRS now expects them to be handled. That gap is where the risk lives, and with the established guidance, the IRS won’t be pulling any punches.
NEAR Protocol endured a turbulent 24-hour stretch between July 22 15:00 and July 23 14:00, declining from $2.97 to $2.81 in a 5.41% move that underscored broader weakness across the altcoin complex.
The token traded within a volatile $0.28 range, peaking at $3.04 before slumping to an intraday low of $2.76. The sharpest selloff emerged during the July 23 13:00 hour as NEAR tumbled from $2.84 to $2.76, with trading volumes spiking to 14.19 million tokens—nearly five times its 24-hour average.
This dynamic established significant resistance at $2.84, suggesting traders will be watching that level for signs of reversal.
During a critical hour from 13:10 to 14:09 UTC, NEAR briefly stabilized after plunging 2.46% from $2.84 to $2.77, before recovering to $2.80.
Trading intensity peaked between 13:41 and 13:51 when over 850,000 units changed hands per minute, highlighting the fragility of support near $2.76.
While the rebound hints at a potential short-term consolidation, the wider altcoin market’s softness raises questions about whether NEAR can sustain upward momentum.
Adding to the mix, NEAR Foundation’s partnership with Everclear to develop cross-chain settlement infrastructure could act as a catalyst for renewed interest. Meanwhile, traders continue to eye the rise of narrative-driven projects such as MAGACOIN FINANCE, which has diverted speculative capital as NEAR contends with development delays heading into Q4 2025.
Technical Analysis
- Price Action: NEAR fell 5.41% from $2.97 to $2.81 (July 22–23), with a trading range of $3.04 (high) to $2.76 (low).
- Volume Spike: 14.19M tokens exchanged during peak selloff, far above the 2.89M daily average.
- Resistance Level: $2.84 established as significant overhead resistance after multiple failed retests.
- Support Level: $2.76 held as a key floor during high-volume volatility.
- Altcoin Context: Broader market weakness weighs on NEAR’s recovery prospects.
Disclaimer: Parts of this article were generated with the assistance from AI tools and reviewed by our editorial team to ensure accuracy and adherence to our standards. For more information, see CoinDesk’s full AI Policy.
Internet Computer (ICP) recorded a 5.35% pullback over the last 24 hours, dropping from $6.01 to $5.69 as weakness set in among the broader altcoin market. ICP struggled to maintain bullish momentum, encountering firm resistance in the $6.00–$6.10 zone that had capped multiple breakout attempts.
The sharpest decline came during the 13:00 UTC hour on Thursday, when ICP slid to $5.62 from $5.97 in just a few minutes, driven by an outsized surge in trading volume. Total daily turnover reached 2.58 million tokens — nearly four times the 24-hour average — underscoring institutional-scale distribution pressure, according to CoinDesk Research’s technical analysis data model.
The broader market showed similar dynamics, with altcoins such as SOL, AVAX and ADA pulling back amid profit-taking and regulatory developments. Analysts characterized the retracement as a healthy rotation following President Donald Trump-related rallies and renewed attention to stablecoin legislation. Despite individual bullish catalysts, many tokens failed to sustain upside traction, with traders reallocating capital and defending key support zones.
Technical Analysis
- ICP dropped 5.35% from $6.01 to $5.69 between July 22 and July 23.
- Intraday high of $6.14 and low of $5.62 established a volatile $0.52 range (8.4% spread).
- Price fell to $5.62 from $5.97 at 13:00 UTC on July 23 amid 2.58 million token volume.
- Volume during capitulation exceeded 100K per minute, nearly 4× daily average of 650K.
- Resistance confirmed at $6.00–$6.10 with multiple failed breakout attempts.
- Critical support formed at $5.62 after heavy selloff during 13:40–13:51 UTC window.
- Market struggled to reclaim $5.83, with persistent selling on minor rebounds.
Disclaimer: Parts of this article were generated with the assistance from AI tools and reviewed by our editorial team to ensure accuracy and adherence to our standards. For more information, see CoinDesk’s full AI Policy.
Cosmos Hub’s ATOM token suffered a steep decline over the past 24 hours, falling from $5.08 to $4.82 as institutional participants intensified liquidation activity. The 5.1% drop was accompanied by a surge in trading volume, with a peak of 7.73 million tokens changing hands during a particularly heavy sell-off between 09:00 and 14:00 UTC on July 23.
The sharp move reinforced resistance around the $5.07-$5.13 range, while accumulation interest surfaced in the $4.78-$4.88 zone, offering tentative support. However, persistent breakdowns below the $5.00 threshold highlighted ongoing distribution pressure that could challenge recovery attempts without sustained buying momentum.
During the final hour of trading on July 23, ATOM experienced pronounced volatility. The price tumbled from $4.90 to a session low of $4.78 before rebounding to $4.81. This recovery, while notable, came on declining volume—potentially signaling exhaustion among short-term buyers.
Akash Network (AKT), another Cosmos-based project, continues to show strength in long-term forecasts, with a potential target of $6.19 in 2025, contrasting ATOM’s current technical fragility.
Technical Analysis Highlights
- 24-Hour Movement: ATOM fell 5.1% from $5.08 to $4.82 with a total range of $0.35 (6.8%).
- Peak Liquidation: July 23, 09:00-14:00 UTC saw volumes surge to 7.73M, well above the 1.11M average.
- Critical Support: $4.78-$4.88 zone showing accumulation on elevated volume.
- Intermediate Resistance: $4.98-$5.00 level faced multiple rejections.
- Institutional Pressure: Sustained breakdown below $5.00 signals distribution activity.
- Intraday Volatility: July 23, 13:10-14:09 UTC saw a sharp dip from $4.90 to $4.78, followed by a rebound to $4.81.
- Rebound Weakness: Recovery to $4.81 occurred on declining volume, suggesting possible exhaustion.
Disclaimer: Parts of this article were generated with the assistance from AI tools and reviewed by our editorial team to ensure accuracy and adherence to our standards. For more information, see CoinDesk’s full AI Policy.
NEAR Protocol Slides 5% as Altcoin Season Abruptly Ends
ICP Drops 5% as Crypto Market Rotates, Resistance Holds
ATOM Sinks 5% Amid Altcoin Weakness, Faces Key Support Test
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