Is Now the Best Time to Invest in Crypto?

We’ve seen in recent times cryptocurrency prices crash again, with Bitcoin falling to its lowest level since December 2020. These drops follow similar price movements one month earlier.

Bitcoin prices fell below 9% recently to $20,000.530 following a weekend when the crypto market lost more than $200 billion and the U.S. crypto lender Celsius Network suspended all withdrawals.

Ethereum (ETH), also dropped around 11 % over the past one-day to around $1000. This is down from $1,400 resistance point. Cardano (ADA), which fell around 11.50% to $0.453698, also suffered a similar fate. It has fallen by more than 25% in the recent times.

Investors may be seeking a piece in the volatile crypto market to take advantage of an investment strategy that encourages “buy the dip” rather than long-term bear markets.

Here are some tips and tricks to help you buy cryptocurrency during a market crash.

Buy the Dip

“Buy the dip” purchase can yield impressive returns, although it is considered to be easier said than done since this strategy requires an investor to be able to accurately time the market. Market experts describe this as extremely difficult.

When investors “buy the dip,” they want to buy a stock after it has dropped from its recent high. They think that the price drop is temporary or just a short-term fluke and that it’s a good time to buy shares at a discount.

Gather Crypto Losses to Lower Taxes

When it comes to lowering your taxes, cryptocurrencies can be a great way to easily “harvest losses” that can be used as tax deductions or to offset other investment gains. Cryptocurrencies have always been volatile, and smart investors can use this constant state of change to their advantage. When big changes happen, like the 30% drop right now, it’s very smart to take a loss if you can. Say you bought Bitcoin in November when it was at its highest price of $69,000 per coin. Right now, Bitcoin is worth about $38,000 per coin.

You can trade that Bitcoin for a stablecoin or any other cryptocurrency right now, and then buy that Bitcoin back in a few minutes. There is no “wash sale rule” that says you have to wait 30 days before you can buy it back. Using the above example, you can record the 45% drop in value on the blockchain and get a $31,000 loss that you can spread out over many years on your tax returns.

The IRS lets you deduct up to $3,000 worth of a capital loss from your regular income in a given tax season. The rest of your extra losses can be carried over into future tax years indefinitely until you have none left. Using this unique feature of crypto is a legal and very effective way to intentionally harvest losses on purpose by locking in a tax offset against other gains you may have made. But the government could take away this crypto tax benefit at any time, so take advantage of it while you can — make sure to check with your accountant or tax professional.

Make Your Crypto Work for You

If you have several different crypto coins or tokens in your portfolio, you should have a look at different automated cryptocurrencies tools such as Bitcoin Apex, where you can choose from many different coins, such as Cardano, Ethereum, Solana, Polygon, Cosmos, and more. The annual percentage yields for these coins range from 5% to 50%, depending on how popular they are.

To get those high returns, you’ll need to “stake,” or put your crypto asset in a pool with other investors’ crypto assets. Your cryptocurrencies give other people the money, or “liquidity,” they need to complete transactions.

Buy Proven Assets at High Discounts

When it comes to lowering your taxes, cryptocurrencies can be a great way to easily “harvest losses” that can be used as tax deductions or to offset other investment gains.

Cryptocurrencies have always been volatile, and smart investors can use this constant state of change to their advantage. When big changes happen, like the 30 percent drop right now, it’s very smart to take a loss if you can. Say you bought Bitcoin in November when it was at its highest price of $69,000 per coin. Right now, Bitcoin is worth about $38,000 per coin.

You can trade that Bitcoin for a stablecoin or any other cryptocurrency right now, and then buy that Bitcoin back in a few minutes. There is no “wash sale rule” that says you have to wait 30 days before you can buy it back. Using the above example, you can record the 45 percent drop in value on the blockchain and get a $31,000 loss that you can spread out over many years on your tax returns.

The IRS lets you deduct up to $3,000 of a capital loss from your regular income in a given tax season. The rest of your extra losses can be carried over into future tax years indefinitely, until you have none left. Using this unique feature of crypto is a legal and very effective way to harvest losses on purpose by locking in a tax offset against other gains you may have made. But the government could take away this crypto tax benefit at any time, so take advantage of it while you can — make sure to check with your accountant or tax professional.

The time to buy Bitcoin was not on the runup to its all-time high of $69,000 this past November. It was during the pandemic-induced market panic in March 2020, when it crashed to $4,000 per coin.

Life-changing fortunes are made during bear markets by making steely investments in high-quality, undervalued assets when others are panic selling. That’s true for any type of investment, but don’t take my word for it — the Oracle of Omaha has proven it time and time again.