07 Mar Using crypto currency volatility offset gains.
A food for thought.
Has anyone utilized cryptocurrency volatility to your advantage?
My understanding is that wash sale currently doesn’t apply to crypto currencies.
As an example, let say you have a 10k short term gain from your stock investments, and you bought 1 btc when it was 58k which is now currently trading at 48k. You could sell your btc at 48k and repurchase right away. This would result in a 10k short term loss and your 1 btc cost basis would now be 48k (with an assumption that btc will eventually replace the gold market and become the world trading currency, so you don’t really care about major corrections/crashes). It’s a timing difference play, but you essentially gave yourself a 10k loss you can use to offset your gains from your stock investment by reducing your crypto basis. Therefore, you won’t have to pay taxes on the 10k short term gain you triggered from the stock investments.
If you play the btc cyclical cycle right, you could legit build up your losses to use later in the future by sellimg and repurchasing instanteously whenever there are significant dips.
Until the IRS updates the tax code, you could legit legally play btc volatility to your advantage to not pay uncle Sam any taxes.