Add the above worst case scenario to the additional scenarios I added yesterday to my prior Bitcoin Elliot Wave idea.
Note although wave 3 is supposed to be the longest, for some commodities wave 5 can be the longest. Also I’m positing a TERMINAL wave condition and an attack which destroys the entire cryptocosm. In this scenario, only legacy Bitcoin (not BSV nor BCH) would continue upwards to $1+ million.
Click the following to read my more detailed explanations of the rules and possibilities allowed by Elliot Wave theory interpretation:
Here’s what the chart above looked like for me when I created it:
P.S. Note that TradingView hid my the prior following idea from public view stating it had violated the site’s guidelines, although I can privately still see it (presumably someone complained about the title of it or the use of the word “no*sense”):
Comment:
Even if we sell the peak, then if I am correct we (in the U.S.) will be taxed ~40% on the income and another ~29% (or ~44% if short-term gain) on the capital gains (not including any state taxation), so our net gains will be only 31% (or 12%). And that’s if we sell the top correctly. It’s very likely we get caught not selling the top, e.g. what if $65k was the top.
This is very, very dangerous.
The only way I can envision to side-step this is either 1) renounce citizenship to a 0% tax country and residence, 2) hold the crypto in a 4% taxed Puerto Rican Act 60 corporation (but this is complex and might not apply), or 3) do not hold crypto that can hardfork at the coming peaks.
Note even legacy BTC hodlers will be affected because they still receive the free airdropped Core sh*tcoins. But they won’t be able to sell them independently of selling their legacy BTC until *after* the surreptitious fork is publicized. And thus they will not be able to sell them for any appreciable value! Thus they will need to sell legacy BTC after the fork to fund their tax obligations for the income from the free airdrop, but for a while there may be no viable means to sell (cryptocosm and exchanges obliterated) and the price of legacy may crater for a while. Also the authorities may really clamp down on selling cryptocurrencies after such an attack that wipes out so many people and institutions.
This is very, very dangerous.
The only way I can envision to side-step this is either 1) renounce citizenship to a 0% tax country and residence, 2) hold the crypto in a 4% taxed Puerto Rican Act 60 corporation (but this is complex and might not apply), or 3) do not hold crypto that can hardfork at the coming peaks.
Note even legacy BTC hodlers will be affected because they still receive the free airdropped Core sh*tcoins. But they won’t be able to sell them independently of selling their legacy BTC until *after* the surreptitious fork is publicized. And thus they will not be able to sell them for any appreciable value! Thus they will need to sell legacy BTC after the fork to fund their tax obligations for the income from the free airdrop, but for a while there may be no viable means to sell (cryptocosm and exchanges obliterated) and the price of legacy may crater for a while. Also the authorities may really clamp down on selling cryptocurrencies after such an attack that wipes out so many people and institutions.
Comment:
Has anyone considered that this just launched BITO exchange traded fund (ETF) is going to exacerbate swings in the futures markets?
So far I see a double-top, not a breakout. Still observing…
No daily close higher on the weekly VWAP either yet.
finance.yahoo.com/ne...-64-k-193200642.html
Two key terms the novice investor might need to know are “contango" and "backwardation." The former is a condition where the futures price is above the expected future spot price, while the latter refers to the reverse (the spot price is above the futures price).
Taken together, it means investors will sometimes gain or lose value longer term by owning the futures-based BTC ETF, even while the price of Bitcoin won’t fluctuate the same way.
But contango and backwardation also open another opportunity for a trade called "cash and carry." The point is to profit from this price difference between BTC futures and the underlying Bitcoin price, also called the futures premium.
Traders could employ the cash and carry strategy for years. But now with the release of the futures-based ETF, the premium is expected to get much larger. Once it does, it will serve another way for U.S. funds and pro-traders to earn profit off BTC futures.
Yet crypto investors believe that most retail investors who aren’t active futures traders probably aren't interested in the cash and carry trade. However, they will need need to understand that an increasing premium in BTC futures means that longer term, it will likely fluctuate based on the additional factor of professionals commodity traders making more sophisticated plays on the product.
Open interest on CME Futures at an all-time-high
So far I see a double-top, not a breakout. Still observing…
No daily close higher on the weekly VWAP either yet.
finance.yahoo.com/ne...-64-k-193200642.html
Two key terms the novice investor might need to know are “contango" and "backwardation." The former is a condition where the futures price is above the expected future spot price, while the latter refers to the reverse (the spot price is above the futures price).
Taken together, it means investors will sometimes gain or lose value longer term by owning the futures-based BTC ETF, even while the price of Bitcoin won’t fluctuate the same way.
But contango and backwardation also open another opportunity for a trade called "cash and carry." The point is to profit from this price difference between BTC futures and the underlying Bitcoin price, also called the futures premium.
Traders could employ the cash and carry strategy for years. But now with the release of the futures-based ETF, the premium is expected to get much larger. Once it does, it will serve another way for U.S. funds and pro-traders to earn profit off BTC futures.
Yet crypto investors believe that most retail investors who aren’t active futures traders probably aren't interested in the cash and carry trade. However, they will need need to understand that an increasing premium in BTC futures means that longer term, it will likely fluctuate based on the additional factor of professionals commodity traders making more sophisticated plays on the product.
Open interest on CME Futures at an all-time-high
Pay special attention to my comment:
Typo: UXTO not UTXO = unspent transaction output on the blockchain.
If Bitcoin crashes to $8 – 18k over next months, many may ride crypto all the way down into the lows, yet they may have a huge tax bill to pay in April 2022 from 2021 profits. Or they capitulate at lows, but will have a huge tax to pay in 2023 due to surreptitious (forkoff of Core from legacy) free airdrop (i.e. taxed as income!) of Core shitcoins in 2022 (? or 2021?) to be publicized perhaps 2023. IOW, maybe the perpetrators surreptitiously fork at the highest price in 2021 or 2022 and all of that would be income for everyone that was hodling evidenced on the blockchain when the surreptitious fork is publicized, yet if that income would be stolen by the posited ANYONECANSPEND donations attack so they individual would have a huge tax bill they can’t afford to pay. The IRS will ask the State department to cancel a taxpayer’s passport if owe $50k to IRS. Are debtor prisons going to return to Western civilization?
The donations attack tax problem might apply to all SegWit shitcoins including Litecoin! Additionally Ethereum is will hardfork in 2022 and if miners forkoff that would will presumably also create a free airdrop of income at a very high valuation. Only the first sellers will get high price presumably as the miners’ fork is heavily sold off to low prices, but the income of the airdrop would be at the highest price! Imagine all those who locked up their ETH in the staking contract for proof-of-stake, thus are prevented by the staking smart contract from selling the free airdrop, lol. It’s possibly the DAO attack again on steriods.
The IRS doesn’t allow subtracting more than $3000 per year in capital losses from income if carried forward from current year. Additionally if the loss wasn’t realized in the year of the income, then it can’t be claimed against the income for reducing income taxes owed. Income is in many jurisdictions taxed at a higher rate than (especially long-term) capital gains. With the posited ANYONECANSPEND attacks there’s no means of selling the tokens with P2SH address lineage even when that fork is published. Yet the date of the airdrop will be at the date of the block that violated the non-legacy protocol, which might be surreptitiously before the publication of the blockchain. Good luck convincing the IRS.
Hardforks are really problematic from a tax standpoint. There needs to needs to be a technological quirk to make airdropped tokens unspendable on hardforks — no altcoin has this so I might have to create one that does.
It’s very dangerous to be hodling cryptocurrency! Caveat emptor!
Makes complete sense that our overlords have planned our destruction with the tax authorities. I remember a claimed quote of a Treasury official who was referring to goldbugs, “we’ll burn their fingertips up to their armpits.”