Consider tax-loss harvesting by selling a losing position in a crypto-related stock and immediately buying a highly correlated but distinct alternative to maintain market exposure. For Bitcoin exposure, investors holding MicroStrategy (MSTR) at a loss could swap into Metaplanet, and vice versa. In the Ethereum ecosystem, a losing position in SBET can be swapped for BMNR, while Solana investors can swap between UPEXI and DFDV. Those with significant losses in leveraged products like MSTX or MSTY could sell to harvest the loss and reposition into MSTR stock or options. Be cautious swapping nearly identical spot ETFs like IBIT and FBTC, as this carries a high risk of being a disallowed wash sale.

Bitcoin Treasury Companies: MicroStrategy (MSTR) & Metaplanet

• The podcast highlights MicroStrategy (MSTR) and Metaplanet as highly correlated assets that are fundamentally different companies, making them a strong example for a tax-loss harvesting strategy.
• While their stock performance has been very similar during certain periods (e.g., June to November), their corporate strategies differ significantly.
  • MicroStrategy is described as a U.S.-based operating company with software and preferreds offerings.
  • Metaplanet is described as a Japanese company with a different strategy that includes put writing to earn income.
• The speaker suggests that because they are distinct companies, swapping one for the other is less likely to be considered a wash sale by tax authorities compared to swapping very similar ETFs.
• A specific scenario was proposed: If an investor is down on their Metaplanet shares, they could sell them to "harvest" the tax loss and immediately buy MSTR shares to maintain their exposure to the Bitcoin treasury theme.

Takeaways

• Investors holding either MSTR or Metaplanet at a loss could consider selling their position and buying the other to realize a tax loss for the year.
• This strategy allows an investor to offset other capital gains with the loss, potentially lowering their tax bill, without giving up their investment thesis in Bitcoin-holding companies.
• Important: The speaker repeatedly states this is not tax advice, and individuals should consult with a tax professional before making any moves.

Ethereum Treasury Companies: SBET & BMNR

• The speaker identifies SBET and BMNR as two very similar companies focused on holding Ethereum.
• Their stock charts are described as "exactly the same," with an estimated correlation in the "high 80%".
• This high correlation makes them ideal candidates for a tax-loss harvesting swap, as an investor can switch from one to the other while maintaining nearly identical market exposure.

Takeaways

• If you are holding SBET at a loss, you could consider selling it and buying BMNR to harvest the loss.
• Conversely, if you are holding BMNR at a loss, you could swap into SBET.
• The goal is to lock in a capital loss for tax purposes while staying invested in the Ethereum treasury theme through a highly correlated alternative.

Solana Treasury Companies & ETFs: UPEXI & DFDV

• The podcast points to UPEXI and DFDV as two correlated plays on the Solana ecosystem.
• The speaker estimates their performance correlation is high, likely in the 70% to 80% range.
• The discussion highlights the flexibility of swapping assets within this theme:
  • Treasury company to another treasury company (e.g., sell UPEXI, buy DFDV).
  • Treasury company to an ETF (e.g., sell DFDV, buy a Solana ETF).
  • ETF to a treasury company.

Takeaways

• Investors with unrealized losses in Solana-related equities like UPEXI or DFDV can use this swapping strategy to harvest tax losses.
• By moving into a different but correlated asset, you can maintain exposure to Solana's potential upside while gaining a tax benefit from the loss.

Leveraged & Income ETFs (MSTR-related): MSTX & MSTY

• The speaker expresses a very bearish sentiment on the performance of MSTX (a leveraged MicroStrategy product) and MSTY (an income/covered call product on MSTR).
• They are described as having been "slaughtered," implying significant losses for holders. The speaker notes they have "entertained against" these products many times in the past.
• For an investor with a large loss (e.g., 85%) in MSTX, a potential strategy mentioned is to sell it and buy options on MSTR instead. The idea is that options could provide a similar return profile in a rebound scenario.

Takeaways

• These are presented as high-risk products that have performed very poorly.
• The discussion suggests that if you are holding these at a major loss, it could be an opportunity to harvest a significant tax loss.
• Swapping out of MSTX or MSTY and into a different asset (like MSTR stock or options) could be a way to reposition while realizing the tax benefit.

Spot Bitcoin ETFs: IBIT & FBTC

• The idea of swapping between two highly similar spot Bitcoin ETFs, such as selling IBIT at a loss to buy FBTC, was discussed.
• However, the speaker strongly cautions against this, calling it a "gray area" that could easily be classified as a wash sale by the IRS.
• The speaker's personal view is that they "wouldn't do it" and would wait the required 30 days before repurchasing a similar asset to be safe.

Takeaways

• Investors should be extremely cautious about swapping between nearly identical ETFs (like IBIT and FBTC) for tax-loss harvesting purposes.
• The risk of the transaction being disallowed as a wash sale is high, which would negate the intended tax benefit. Consulting a tax professional is crucial here.

General Warning on Leveraged ETFs (Example: TSLL)

• The speaker uses TSLL (a leveraged ETF for Tesla) as a general example to warn about the dangers of holding leveraged products long-term.
• The concept of "volatility drift" is mentioned, which can cause these ETFs to significantly underperform the underlying asset over time, even if the asset's price goes up.
• The advice is that these products are designed for single-day holding periods only.

Takeaways

• Leveraged ETFs are not suitable for long-term buy-and-hold strategies.
• Investors should understand that the daily rebalancing mechanism of these funds can lead to value decay over time, a risk known as volatility drift.