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Investing Insights

Wesley Jones edited this page Sep 30, 2021 · 5 revisions

BTC is inversely related to interest rates

Like all growth securities, such as big tech stocks, they are inversely related to interest rates. BTC tends to follow growth securities at a macro level. So when interest rates rise, BTC falls. When interest rates fall, BTC rises.

Reference: https://apple.news/AHId9oX7pQyGvS80J1Wjz2Q


BTC is taxed as virtual currencies

Cryptocurrencies have now been recognized by the IRS as digital currencies and are treated as property under the tax laws. Traded currencies result in capital gains and losses on your personal taxes. There is no benefit to trading under an LLC or S-Corp since you do not pay income or self-employment taxes on capital gains.

Some tax benefits you could take advantage of:

  • Trading in a retirement account such as an IRA. However, I think you are still limited to its $5k contribution limit per year.
  • The wash sale concept which allows you buy and sell at a similar price to wash your gains from a previous buy/sell.

Reference: https://www.irs.gov/businesses/small-businesses-self-employed/virtual-currencies


Tax Solutions

  • Koinly.io ($99) - Best experience overall. One upload for everything. Provides best UI. Can't tell if it does short/long term gains. Would need to upgrade.
  • Bitcoin.tax ($39.95) - involves multiple steps to upload data. Provides FIFO and LIFO. Provides some insight into which coins were settled in each trade.
  • CryptoTrader.tax ($99) - Doesn't provide any insight with the free version. Almost looks like a scam.