Tax-Loss Strategy for Underwater ETH Bag Holders

Are you someone who bought ETH above (maybe WAY above) it’s current price? Do you believe in the project and don’t want to sell your bags? Is selling at a loss just not in your DNA? Could you use a dose of Copium? Consider this strategy-

You can stake your ETH from your Ledger using Lido. You see, when you stake with Lido, you swap your ETH for stETH at the prevailing spot price at the time of the swap. Because you are trading one asset for another, this creates a taxable event. Usually, this is a bad thing if you are in profit. But if you are underwater, this can be a great opportunity.

Say you bought ETH at $4k. At $3k you could swap out for stETH, bank a $1k capital loss (tax write-off against gains), while keeping the value of your ETH position intact. When ETH recovers, you can swap back out, have your original position intact (plus some interest) and a capital loss to help offset your nice fat capital gains you’ll get from holding through this.