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Here is why a CryptoPunks NFT Holder Sells at a $7 Million Loss

A very rare CryptoPunks NFT was just sold for $3.3million. This is $7 million less than the seller's loss when you consider the falling price Ethereum....
Photo by Lavalabs.com

A very rare CryptoPunks NFT was just sold for $3.3million. This is $7 million less than the seller’s loss when you consider the falling price Ethereum.

If they play their cards right, however, tax season could save the ex-owner millions.

Punk #4156, a rare breed that includes an “ape” appearance, and a blue bandana, was sold early Friday morning for 2,691 ETH. This is approximately $3.3 million. ETH currently trades for about $1,200.

Although $3.3 million may seem like a lot to pay for an non-financial, which is a unique token that identifies ownership, some Punks collectors considered it a lowball offer.

borovik.eth tweeted, “Easily worth 25mil” — who also owns Punk #3938.

Tank, the owner of Punk #4227 wrote that $3.2m was a joke but might be appealing for the holder to take it.” Tank also posted in a tweet just before the bid was accepted.

Punk #4156 was bought in December 2021 at 2,500 ETH. This is 191 ETH less than it is today but still worth $10.26million in December. ETH was trading at more than three times the current price. This means that today’s seller made a small profit in Ethereum, but lost a lot of USD value.

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So, why did the owner decide to sell his business for $7 million? It could have been related to tax loss harvesting.

It could be a financial win if the ex-owner of Punk #4156 declares the sale as a $7million loss on their taxes. Although the IRS might consider the NFT’s losses as losses for tax purposes, the seller does not have to convert the ETH into USD to claim the loss.

This is a very common technique that traders use to lower their capital gains liability. You could also reduce capital gains income by $7,000,000 to get additional tax benefits.

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One Doodles NFT holder said today that tax loss harvesting is a smart idea if he is certain he won’t see a return on his investment soon.

The seller might be playing a game of tax loss harvesting. But what about the buyer? $3.3 million in thiseconomy

Janik.sol claims to have purchased Punk #4156 and sees it as a gateway into “generational wealth.”

“I need a Punk in order to convert my life savings into wealth for the future. They are worth it. Because I knew that punks could be worth something. “I will be there when the bear is gone,” Janik.sol tweeted.

However, this isn’t the only CryptoPunk sale of note this week. Recent sales for NFTs are increasing, with Punk #4464–another avatar in the ape-style ape style–sold for $2.6 Million Tuesday despite the crypto winter.

Elena Argyros

Elena Argyros

Elena is cryptocurrency writer / journalist based in Europe. She has extensive knowledge in the crypto space and is a solidity programmer by trade. Elena has built an extensive resume working with some of the most ground breaking blockchain firms. Being in Europe, Elena has amassed a large network of professionals in the space and states "The technology behind blockchain is going to impact everyone on earth in a good way, once you get to understand it".
Elena Argyros

Elena Argyros

Elena is cryptocurrency writer / journalist based in Europe. She has extensive knowledge in the crypto space and is a solidity programmer by trade. Elena has built an extensive resume working with some of the most ground breaking blockchain firms. Being in Europe, Elena has amassed a large network of professionals in the space and states "The technology behind blockchain is going to impact everyone on earth in a good way, once you get to understand it".

© 2022 The Daily Encrypt. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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