Why Sophisticated Crypto Investors Don’t Care if the Market Tanks

Crypto has had a wild ride lately. Over the last six months, Bitcoin plummeted by nearly half, <a href="https://www.nbcnews.com/business/markets/bitcoin-whats-going-on-explainer-rcna28097" rel="noopener ugc nofollow" target="_blank">erasing billions of dollars of market value</a>. Many sophisticated crypto investors, though, likely don’t care at all. Why? These crypto whales use a special kind of financial alchemy to achieve massive profits even if the crypto markets tank. And they do it all without paying taxes. It’s totally legal (for now anyway), and is driven by a loophole that’s hiding in plain sight. To understand how their process works, we need to look at Defi, tax policy, and the weird dynamics that drive crypto markets. <h2>Selling Coca Cola</h2> Imagine that an investor buys a traditional stock, like Coca-Cola. The company then has a bad quarter, and its share price goes down. Our investor sells her shares at a loss. On her taxes, our investor can then <a href="https://www.investopedia.com/articles/personal-finance/100515/heres-how-deduct-your-stock-losses-your-tax-bill.asp#:~:text=If%20you%20don't%20have,D%20for%20your%20tax%20return." rel="noopener ugc nofollow" target="_blank">take a deduction for her capital loss</a>. (Just a reminder — this article isn’t intended to provide tax or investment advice, and you should consult a professional advisor for advice on your own tax and investment situation.) Basically, she can use her investing loss on Coca-Cola stock to offset any investment gains she’s made elsewhere in her portfolio or even <a href="https://www.experian.com/blogs/ask-experian/can-you-deduct-capital-loss-on-taxes/#:~:text=The%20IRS%20allows%20you%20to,over%20into%20the%20following%20years." rel="noopener ugc nofollow" target="_blank">some of the income she earned from her job</a>. Allowing deductions for capital losses is a way that the IRS eases the blow of financial losses for investors. <a href="https://blockchainlifetech.com/why-sophisticated-crypto-investors-dont-care-if-the-market-tanks-71a5ca7d0ee7">Read More</a>