Bitcoin down about 30% from peak, emerging as a 'tax-saving tool'

Bitcoin (BTC), the leading cryptocurrency, has fallen nearly 30% from its year-high, and some investors say they can use Bitcoin's weakness as an opportunity to reduce taxes.

On the 26th (Korean time), Bloomberg reported, "While Bitcoin is down about 30% from its peak, the Standard & Poor's (S&P) 500 index rose about 18% over the same period, widening the return gap between stocks and virtual assets," adding, "Investors who made profits in stocks are increasingly selling Bitcoin to cut their taxes."

This is a strategy called 'tax-loss harvesting', in which investors sell assets that have fallen in price to lock in losses and thereby reduce taxes on gains from other investments such as stocks.

In particular, tax-loss harvesting is easier for virtual assets than for stocks, so many investors can actively use it. Unlike stocks, virtual assets do not yet have rules like 'wash sale', so an investor who sells Bitcoin and repurchases it on the same day can still have the loss recognized for tax purposes.

Some observers say that this year's price volatility in Bitcoin could lead more investors to implement such a strategy. Will Kong, a professor of finance at Cornell University's Samuel Curtis Johnson Graduate School of Management, explained, "(Bitcoin's) roughly 30% decline from its peak creates a year-end stop-loss opportunity for investors who recently entered the market," adding, "Such price movements have historically increased year-end selling pressure."

However, tax oversight of virtual assets is expected to be strengthened from next year, because from 2026 the United States plans to introduce a system requiring exchanges and broker-dealers to report virtual asset sale information directly to the IRS.