Crypto and Tax Season.
Christmas is coming, which means festivities and presents… And taxes. So far, the Internal Revenue Service (for U.S. taxpayers) has clearly outlined the following taxable events for crypto investors:
- Selling crypto for fiat
- Paying for goods and services
- Swapping between crypto assets
- Mining crypto
- Receiving airdrops and rewards
All the above-mentioned activities need to be filed during the tax season, which is between Jan. 1 and Apr. 15.The tax season is around the corner, and crypto can be used to lower tax liabilities by reporting capital losses. For instance, if you sell BTC to fiat at a loss, you can deduct this loss from other capital gains (i.e., investment in equities) or up to $3,000 in non-investment income.
Tax-loss harvesting allows investors to turn their unrealized losses into realized losses, yielding tax savings. As such, it’s natural to see a Bitcoin sell-off during December.
Moreover, in the past two years, bitcoin’s price action in December was similar, which may point to integrating crypto in traditional finance. The more U.S. institutions come to the space, the more market players would want to tax-harvest.
Bitcoin performance during December in 2018 and 2019. Source: CoinGecko.
According to our lead Bitcoin analyst, Nathan Batchelor, bitcoin is still looking bullish unless it dips below $16,200 in the following weeks. So, despite the ongoing pullback, BTC will likely revisit $20,000.
Despite the overall bullish outlook on the market, altcoins will likely continue to be negatively impacted by bitcoin’s volatility. As mentioned in the previous Digest, the real altcoin season will occur after bitcoin breaks its 2017 all-time high and stabilizes.
SIMETRI Portfolio Follows the Market
SIMETRI portfolio outperformed the broader altcoin market last week when bitcoin was moving sideways. However, bitcoin’s downward pressure pushed our portfolio’s performance from 557% to 443%.
Nevertheless, the SIMETRI portfolio’s performance continues to stay above altcoins. Moreover, the past week’s performance hints that our Picks will likely be among the first to rebound once the correction is over.
Pick of the Month ROI performance against Bitcoin and altcoins. To view live data, click on this link.
