In the US if you sell a security at a loss, you get to deduct the amount of the loss from your taxable income or from longterm capital gains.
Here is the catch though:
If you sell an asset and buy another of the same kind within 30 days, your lose your right to deduct your losses from taxable income.
You have until December 31 to sell your losing positions to claim your losses.
Here is a thesis:
2018 hasn’t been kind to crypto crowd. Investors are sitting on huge piles of paper losses. What do you do when you have losses but believe in the long term potential of your investments?
You sell them and claim losses on your tax bill. 30+ days later (January-February depending on when you sold), you get back in.
What if the selloff is triggered by large holders who are liquidating their positions now to buy back their crypto in 2019?
If so the Bear market is likely to end by December 31st. Sell pressure is probably going to abate as early as the end of next week. For investors looking to take positions early in January 2019, the deadline to sell their investments is November 30th.
If this thesis is correct, we will hit the bottom in December. We are likely to see a significant slowdown in selling pressure starting December 1st.
By Q1 2019 we may see a complete reversal as investors return to the market along with institutional money.
What do you think?
PS: this is not financial advice. Please do your own research.