The term “Crypto Winter” started circulating earlier this year. For those not aware, a “Crypto Winter” is an extended period of decline in the crypto market. At the time of writing this, Bitcoin is down 43% and Ethereum down 61% year to date.
Most crypto holders are currently in the red. However, from a tax perspective, this is a clear opportunity to capitalize on tax benefits.
Crypto is currently not subject to the IRS 30-day loss wash rule. What does this mean? It means if you currently own crypto that is in the red you are able to get a crypto asset today, buy that same asset again tomorrow, and potentially realize the loss on your tax return.
This is great for individuals that have “diamond hands” or are long-term holders.
You are able to realize the loss today without completely getting rid of the crypto asset for a minimum of 30 days.