Last month, half a trillion US$ worth of crypto currency vanished, seemingly overnight. So has the sun set on crypto assets once and for all? Unlikely. Investors are feeling the sting and wishing they’d sold sooner, but every cloud has a silver lining, and you may well want to keep hold of those digital coins a little longer.
Crypto Currency Always Fluctuates
It is worth remembering, that while this large cryptoasset crash is in the headlines, we’ve been here before and we’ll be here again.
In 2017 bitcoin started to drop over 18 months from around $20,000 to as little as $3,200 before recovering. This fluctuation is typical of the medium, and recent events have resulted in this crash being a little more dramatic.
And in fact, the cryptocurrency market is looking more and more like the stock market, where we expect fluctuations – they’re even roughly in-step with each other. So seasoned crypto investors aren’t too worried about this current crash.
Take a look at the biggest players in the market, sure the figures look terrible in the last 30 days, but the 5-year picture doesn’t always look so bad.
Declare A Loss On Your Self Assessment Tax Return
You do not have to report losses straight away – you can claim up to 4 years after the end of the tax year that you disposed of the asset, so a loss now may be of benefit in the future to help you remain under the GCT annual exemption threshold.
Typically crypto markets can take a few years to recover, but if recovery looks anything like Nov 2021 when crypto was sailing high, then the ability to declare your losses might be beneficial.
If you need help claiming a loss please contact Warr & Co.
Consider Buying In The Dip?
Be aware, there are never any guarantees with crypto. If you are considering starting off with crypto currency or crypto assets it’s worth consulting your accountant to discuss how this potential investment could affect your overall tax situation. Forbes also have a useful guide to getting started in crypto which can be found here.