nrd525 Market Tracker

[nrd525]

For US taxes, you also have to probably declare Bitcoin Cash and Bitcoin Gold as income even if you never sold.  Possibly even if you didn't get it yet, or possibly even if you didn't get it at all!

So you would have a cost basis for those based on the market value at the time of the fork.

I'm less sure about forks like Bitcoin Diamond. Maybe it if catches on with some major US exchanges and/or is supported by wallets then it might count as income. They gave out 10 Bitcoin Diamonds per bitcoin - so with it trading at $45 - that is some serious money if it actually happens.

In theory you might be responsible for all of the coin drops as "income".  Though in practice most of the past ones were minor. 

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[Syke]

For US taxes, you also have to probably declare Bitcoin Cash and Bitcoin Gold as income even if you never sold.  Possibly even if you didn't get it yet, or possibly even if you didn't get it at all!

I don't see how they can make that argument if you never take control of the airdrops.

[nrd525]

Forbes article:

https://www.forbes.com/sites/greatspeculations/2017/08/04/how-to-report-bitcoin-cash-and-avoid-irs-trouble/#113405cc3066

[Syke]

I disagree. If I put money in a safe and say it's now yours, you don't have to declare that as income until you actually take the money.

[Syke]

Take for instance this case referenced in a linked article.

Let's say that your boss gives you a paycheck and you put it in your desk drawer - and then you quit and forgot about the check. You still got paid. The check is still taxable to you even if you never take steps to cash it (such as replacing the check).

In that case, you accepted the check. You took control of it, therefore it is taxable. But that's not how airdrops went. The correct analogy would be this:

Let's say that your boss says he wrote you a paycheck, but he never gave it to you. Did you get paid? No, therefore it is not taxable.

[nrd525]

Syke I agree with you that is how it should be.

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Digital kitties clog the ethereum blockchain. Has Ethereum finally found its main use case?

https://www.coindesk.com/loveable-digital-kittens-clogging-ethereums-blockchain/

[nrd525]

We could see a big blow-off top around the time the CME goes through.  So December 18.  I've got no real idea, but something like a run at 15k or 20k followed by a crash to 7-9k would be along the lines of what is possible.

[nrd525]

Not sure if this would affect Bitcoin.
https://www.bloomberg.com/news/articles/2017-12-06/this-little-known-tax-proposal-takes-aim-at-your-trading-account

[Samarkand]

Not sure if this would affect Bitcoin.
https://www.bloomberg.com/news/articles/2017-12-06/this-little-known-tax-proposal-takes-aim-at-your-trading-account

I think there are ways you can circumvent this new rule. I´m not from the US so take my advice with a grain of salt, but
in my country it is possible to circumvent this by using "layers". By this I mean separate trading accounts (or wallets
in the case of BTC) where you can easily prove that the stocks/coins had a different investment purpose.

E.g. you could have a long-term investment hardware wallet and a short term trading wallet. If you sell coins from
the short term trading wallet it is irrelevant if you still have "older" (=bought earlier) coins in the long-term investment wallet.

The financial authorities accept this kind of structure even though FIFO is generally the standard.

Of course you have to stick to this method once you start to declare this way, it is not possible to use "layers" when it suits
you and FIFO when it suits you better.

On an unrelated note, Bithumb is going crazy right now. BTC is trading for nearly 18k $, which would make
for a really nice arbitrage opportunity if you are able to setup a Korean exchange account.

[nrd525]

GDAX makes a run at 20k - hitting 19697.  Was the exchange actually working at the time though?  They often have overload issues.  By contrast, BFX was only up to 15700 - so that seems very weird.  We have had flash crashes, but flash spikes are more unusual - especially as GDAX has very limited shorting.

I was skim reading the Instructions for IRS 8949 form - and they have a list of rules under which you can use the average cost method.   I don't think my holdings of bitcoins meet these rules.

On the other hand, I was researching the Obamacare subsidy and its massive dropoff at around 400% the poverty line you lose your entire remaining subsidy if you earn just $1 more than 400% the poverty line.  So I probably want to stay under that as I don't want to lose 2k-3k in subsidy.

Yesterday I sent a couple BTC to GDAX to sell in case things get super bubbly. I sold 0.1 BTC so far at around $14300.

[nrd525]

There is a rumor that whales are buying with plans of dumping when futures are open.  While I normally ignore rumors, this one makes some sense.  The futures won't be backed by actual bitcoins (right?), so you could possibly make more money on the futures than you lose from selling your bitcoins.  Though I am expecting the futures to be underused compared to the hype.  I think we we already have most of the wall street money - and most of the remaining players are going to need a lot of convincing (and probably more stability) to get in.  And if the futures lack volume this plan won't work.  Though it is likely to dump/crash for other reasons.

For instance, three family members who I talk to have been saying I should "sell" forever. They still say "sell".  They aren't going to buy an asset that increased by 20x in the past year. Of course they are more risk adverse.

[Syke]

Yup, that sounds plausible. In a day or two it might be a good time to lock in a small portion of profit.

[nrd525]

More signs of the bubble top.
-Korea has a $3000 premium or almost 20%.  Earlier this year we had China with a 10% premium for a while, but 20% premiums are rare.

-Crypto kitties (if you want to play with cats get a cat, or the new Sims 4 expansion) are also very bubbly.  Though they are in Ether which hasn't been doing so well.

-Almost all the altcoins are down in USD, and even more so in BTC.

-50 btc in donations to Andreas after Roger Ver shames him for being "poor"

[TheQuin]

GDAX makes a run at 20k - hitting 19697.  Was the exchange actually working at the time though? 

I did see reports that the API was unavailable for 30 minutes during the peak. Also that the exchange was heavily overloaded and difficult to use for much of the day. Bitfinex was under heavy DDoS attack all day and difficult to use for long periods as well.
 

There is a rumor that whales are buying with plans of dumping when futures are open.  While I normally ignore rumors, this one makes some sense.  The futures won't be backed by actual bitcoins (right?),

Technically correct but as futures contracts are deliverable many market participants will be using them to hedge actual Bitcoin positions.

so you could possibly make more money on the futures than you lose from selling your bitcoins.

Quite possible as the leverage will be much higher.

Though I am expecting the futures to be underused compared to the hype. 

I would agree there but it is an unknown and I'll be watching with interest.

I think we we already have most of the wall street money - and most of the remaining players are going to need a lot of convincing (and probably more stability) to get in.  And if the futures lack volume this plan won't work.  Though it is likely to dump/crash for other reasons.

Most of the Wall Street money is excluded at the moment. Hedge funds can play but major investment funds, pension funds etc. can't play. Futures don't change that in themselves but are the first step to making Bitcoin a legitimate investment. I would expect ETFs and other investment vehicles to be launched, this will be a gradual process.

For instance, three family members who I talk to have been saying I should "sell" forever. They still say "sell".  They aren't going to buy an asset that increased by 20x in the past year. Of course they are more risk adverse.

It looks like you have a great contrarian indicator there, you know what to do when they buy.

[Samarkand]

...  Though I am expecting the futures to be underused compared to the hype.  ...

You could theoretically use the experiences of LedgerX as an indicator.

In the race for bitcoin derivatives, both CME and Cboe have lost to a startup. LedgerX won CFTC approval to offer swaps and options on bitcoin and began trading earlier this month. Volumes have been light so far. Yesterday, 103 bitcoin swaps traded on LedgerX, while nine options contracts changed hands, according to the exchange.

The volume has been pretty disappointing to say the least.

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Quite possible as the leverage will be much higher.

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The margin requirements will be pretty high as well.

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-50 btc in donations to Andreas after Roger Ver shames him for being "poor"

Why do you see this as a "bubble indicator"? To me this just looks like a generous donation from a BTC whale
to a guy, who has done a lot to promote Bitcoin (lectures, interviews, Youtube videos, at least 2 books...).

[TheQuin]

...
Quite possible as the leverage will be much higher.

...

The margin requirements will be pretty high as well.

Maybe high compared to other futures but when I say leverage will be much higher compared to what we have now that infers that the margin requirement is much lower.

leverage = contract value / margin requirement

Unlike crypto exchanges, these are set as fixed dollar amounts per contract. The exchange will set the overnight maintenance level and brokers set the day trading levels. The variation from broker to broker can be quite large and I haven't seen any announcements yet. I am expecting they will be quite conservative to start and then come down when they have more data for risk assessment. But in any case, they will be significantly higher than currently available. For example, 3.3x on Bitfinex compared to E-Mini S&P 500 currently ~330x with my broker.

[Samarkand]

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Maybe high compared to other futures but when I say leverage will be much higher compared to what we have now that infers that the margin requirement is much lower.

leverage = contract value / margin requirement

Unlike crypto exchanges, these are set as fixed dollar amounts per contract. The exchange will set the overnight maintenance level and brokers set the day trading levels. The variation from broker to broker can be quite large and I haven't seen any announcements yet. I am expecting they will be quite conservative to start and then come down when they have more data for risk assessment. But in any case, they will be significantly higher than currently available. For example, 3.3x on Bitfinex compared to E-Mini S&P 500 currently ~330x with my broker.

Now I understand your argument better.

However, you are cherry picking here when you point out Bitfinex with 3.3x leverage. Bitmex
has been offering BTC futures (even a perpetual swap without an expiry date) for a long time and offers up to 100x leverage.

The difference now is that CBOE and CME are obviously operating at another level than Bitmex. Nevertheless, I still expect that the trading volume will not reach
the expectations that people currently have. In the long-term the introduction of these futures should be great, because as you already
pointed out this is only the prelude for other financial products related to BTC (e.g. an ETF).

[nrd525]

I'm guessing the margin will be even higher than Bitfinex's 3.3x.  Unless the firms are willing to take big risks or have a way of getting money from their customers after the fact. We could easily have a 50% crash.

Andreas might have received 102 bitcoins, possibly more.  It's the wealth effect of the bubble. People have more money than they can figure out how to spend or invest.  I know I do.
http://fortune.com/2017/12/08/bitcoin-prices-anton-antonopoulos-rich/

By contrast, the "upgrade bitcointalk" donation fund had a lot more bitcoins (several thousand?) but was created when they were worth single digits.  I believe this Andreas donation is of epic proportions for both bitcoin and non-bitcoin (though some crowd sourced donations for medical problems may have matched it).

[nrd525]

According to the IRS instructions for F8949, I'm pretty sure that one cannot use the "average cost" method for Bitcoin capital gains.

See page 5.
https://www.irs.gov/pub/irs-pdf/i8949.pdf

It looks like you can only use that method if you are dealing with mutual funds or some kind of dividend reinvestment.  As such, I think I need to refile my back taxes.  Will have to pay more for past years, but end up ahead overall (after 2017) as I can use FIFO and qualify for the long term capital gains rate.  Or I might try to figure out how to use "specific lots".

I'm doing a 10 minute phone consult with bitcoin tax accountant in CA on Monday.  I also downloaded an Ebook from Amazon on bitcoin/crypto and taxes - a decent read, though it didn't cover my question.

I'm tempted to sell 2 BTC if we get up to 20k territory.  Of course timing the top is almost impossible.

Litecoin ATH up 49% in the past 24 hours. 

Bitcoin dominance around 62%.
https://www.livecoinwatch.com  - an alternative to the bitconnect ponzi supporting "coinmarketplace.com" scam site.

[Samarkand]

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Litecoin ATH up 49% in the past 24 hours. 
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There are rumours that this is mainly caused by the huge transaction backlog of the BTC blockchain.
People, who wanted to sell their coins during the recent 2k dip often used LTC or other altcoins to transact in
order to get their coins to an exchange faster (many possible out of fear, because they thought the bubble might
pop completely).

This development was probably exacerbated by the fact that Bitfinex had problems to keep up with the withdrawal
demand and LTC was one of the currencies where withdrawals were still working flawlessly.

The BFX reddit was/is full of people complaining about their missing BTC and ETH withdrawals:
https://www.reddit.com/r/bitfinex/