Stock investors lose their deduction when they buy back too soon, but Bitcoin plays by different rules. Before you rush to harvest a loss, two pending bills and a few overlooked traps could undo the move entirely.

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When a stock investor sells shares at a loss and buys them back within 30 days, they lose the tax deduction under the wash-sale rule. However, that rule doesn’t apply to Bitcoin (CRYPTO:BTC) you own directly. Section 1091 covers “stock or securities,” and the IRS has treated crypto as property since Notice 2014-21. So Bitcoin tax-loss harvesting lets you sell at a loss, buy back immediately, and still claim the loss.

Why Bitcoin Investors Can Harvest Losses, Unlike Stock Investors

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As the year comes to a close, many Bitcoin holders have large unrealized losses. Bitcoin currently trades at $75,662, down 40% from its $126,080 all-time high on October 6, 2025. Anyone who bought in late 2025 is likely facing a sizable paper loss.

Altcoin investors may be even worse off. Ethereum (CRYPTO:ETH) is down 55% from its peak, XRP (CRYPTO:XRP) has dropped 68%, and Solana (CRYPTO:SOL) is down 70%. So investors who bought near those highs face larger percentage losses than Bitcoin buyers. Our look at Ethereum’s year-end outlook covers how far it has to climb.

On the Reddit community r/Bitcoin, one user said they felt “zero panic” and kept buying, but asked whether selling to realize a loss would be wise once prices dropped well below what they paid. Many investors face the same dilemma, because they want the tax break without giving up their coins.

A loss that exists only on paper doesn’t help with your tax bill. Once you sell, that loss can offset taxable gains in 2026 or in future years.

How a $50,418 Bitcoin Loss Works on a 2026 Tax Return

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Say you bought 1 BTC at its $126,080 peak on October 6, 2025. If you sell it now for $75,662, you realize a $50,418 loss. If you then buy one coin back the same day, you still hold the same amount of Bitcoin.

You can now report that 40% loss on your tax return. Since you’ve held the coin for over a year, it counts as a long-term loss, which offsets long-term gains first. For example, if you have $50,418 in long-term gains in 2026, the loss would cancel them all, saving you about $7,560 in federal taxes at a 15% long-term rate.

If your losses exceed your gains, the IRS lets you deduct up to $3,000 a year from ordinary income ($1,500 if married filing separately) and carry any excess forward. Without gains to offset, it would take roughly 17 years to fully use the $50,418 loss this way.

When you buy back the Bitcoin, your cost basis resets to $75,662 and your holding period starts over. If Bitcoin’s price rises back toward its high, you’ll owe taxes on that gain when you sell later. So tax-loss harvesting mostly pushes your tax bill into the future, and it helps most when you have gains to offset now.

The Traps That Can Wreck a Same-Day Bitcoin Rebuy

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  1. Spot Bitcoin ETF shares, like iShares Bitcoin Trust (NASDAQ:IBIT), are securities, so the wash-sale rule applies to them and to other spot funds. If you buy back shares within the 30-day window, the IRS disallows your loss and adds it to the cost basis of the new shares under Section 1091(d).
  2. The economic-substance doctrine requires a deal to change your financial position “in a meaningful way,” apart from tax benefits. A quick sale followed by an immediate rebuy changes very little, so letting some time pass and keeping some market exposure between the trades could make the sale easier to defend.
  3. State laws may not line up with federal rules, so a state’s capital loss rules could shrink your benefit.
  4. On September 30, 2026, Sen. Steve Daines introduced S. 5616, the ADAPT Act, which would apply wash-sale rules to digital assets. The bill has been sent to the Senate Finance Committee.
  5. A separate House bill, H.R. 10357, passed the Ways and Means Committee 38 to 5 on September 16, 2026, with a proposed wash-sale start date of September 14, 2026. Neither bill is law yet, but if the House version passes as written, it could reach back to sales already made.
  6. Accurate records are critical. For each sale and repurchase, track the date, price, and lot sold. This is especially important if you bought coins at different prices, since an exchange’s default setting might not pick your highest-cost coins.
  7. The sale has to be completed by December 31, 2026, to count toward your 2026 taxes. Only finalized sales create deductible losses, so a coin still held on January 1, 2027, can only produce a loss on a 2027 return.

Yes, You Can Rebuy Bitcoin, but the Sale Has to Settle by December 31, 2026

You can rebuy Bitcoin right after selling it at a loss, and the move helps most for holders with gains to offset in 2026, since the $3,000 annual limit on ordinary income makes a large loss slow to use any other way.

The House bill’s retroactive start date adds a wrinkle. If Congress passes it as written, a same-day rebuy made after September 14 could lose its tax benefit, so it’s worth checking both bills’ status on Congress.gov before trading in December. This is general information, not tax advice, and a tax professional can confirm how the rules apply to your situation.

Contact [email protected] for any questions or corrections.

Sam Daodu is a crypto analyst and the editor of 24/7 Wall St.'s Crypto Desk, where he covers Bitcoin, XRP, Ethereum, Solana and the altcoins investors search for most. His work focuses on price levels, spot ETF flows, on-chain data and the regulatory decisions that move crypto markets, written so a first-time buyer and a seasoned trader can both use it.
Sam has written about crypto professionally since 2019 and has published more than 2,000 articles. Before joining 24/7 Wall St., he wrote for crypto media outlets and Web3 companies and ghostwrote for crypto founders and token launches. His analysis is syndicated on Yahoo Finance, MSN and AOL and has been cited by other crypto news sites. He also founded MacLabs Marketing, a content and personal branding agency for crypto founders and executives.
When he isn't reading charts, Sam is usually at the gym or watching One Piece, a series he maintains has better tokenomics than most altcoins.