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Bitcoin soars toward $40000 mark, amid speculation over Amazon cryptocurrency plans

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Highlights:

  • Bitcoin soars toward the $40,000 mark.
  • Bitcoin price hit $39,850 (roughly Rs. 29.6 lakhs), its highest since mid-June.
  • The price in India stood at Rs. 28.3 lakhs as of 10 am on July 26.

Bitcoin rose as far as 12.5% to hit $39,850, its highest since mid-June during the Asia session, while ether hit a three-week peak of $2,344. On the heels of bitcoin’s best week in almost three months, the move put the squeeze on short-sellers.

Twitter boss Jack Dorsey also said last week that the digital currency is a “big part” of the social media firm’s future and, on Sunday, London’s City A.M. newspaper reported – citing an unnamed “insider” – that Amazon is looking to accept bitcoin payments by year’s end.

Why Is Bitcoin’s Price Rising?

  • Bitcoin broke a key resistance level making investors believe there is further upside.
  • Rising inflation and the potential for even more stimulus continue to push people to safe-haven assets.
  • Increased adoption from payment applications like PayPal will give far more people easy access to cryptocurrency.
  • Publicly traded companies purchasing Bitcoin show a high level of confidence in its appreciation.
  • Bitcoin’s historical trend of closely following its halving stock-to-flow model shows an ambitious and extremely bullish outlook.

Bitcoin vs. commodities

In recent weeks, bitcoin’s correlation with the S&P 500 has started to rise, while the correlation with commodities continues to fall. That divergence could make bitcoin attractive for investors looking to diversify exposure across equities, commodities, and cryptocurrencies.

A tax loophole is helping bitcoin holders save tons of cash by avoiding federal taxes

IRS classifies digital currencies like bitcoin as property, losses on crypto holdings are treated much differently than losses on stocks and mutual funds, according to Onramp Invest CEO Tyrone Ross. With crypto tokens, wash sale rules don’t apply, meaning that you can sell your bitcoin and buy it right back, whereas, with a stock, you would have to wait 30 days to buy it back.

“One thing savvy investors do is sell at a loss and buy back bitcoin at a lower price,” explained Shehan Chandrasekera, a CPA and head of tax strategy at crypto tax software company CoinTracker.io.  “You can harvest an unlimited amount of losses and carry them forward into an unlimited number of tax years,” Chandrasekera added.

So let’s say a taxpayer purchases one bitcoin for $10,000 and sells it for $50,000. This individual would face $40,000 of taxable capital gains. But if this same taxpayer had previously harvested $40,000 worth of losses on earlier crypto transactions, they’d be able to offset the tax they owe.

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