GBTC sellers will turn into Bitcoin buyers

YEREVAN ( — The Bitcoin (BTC) price continues to drop globally after reaching a 2-year high above the $47,000 mark. At the time of writing, BTC exchanges hands at around $40,800, thanks to the growing selling activity. However, according to SkyBridge Capital founder Anthony Scaramucci, there will be an increase in capital inflow into the leading cryptocurrency in the coming weeks, thanks to investors who recently dumped Grayscale Bitcoin Trust (GBTC) ETF. 

Anthony Scaramucci believes investors who dumped Grayscale Bitcoin Trust (GBTC) shares are unable to buy Bitcoin thanks to Wash Sales Rule.
Bitcoin price has dropped since recent highs. Source: CoinStats

US investors to buy BTC after offloading GBTC?

In an interview with Yahoo Finance at the World Economic Forum in Davos, Scarmucci referred to the famous Wash Sales Rule. 

This pivotal rule in traditional asset trading applies to US traders investing in securities like stocks and bonds. 

Under the popular tax-loss harvesting market behavior, people can offset their capital gains by decreasing their taxable income. When they sell at a loss, current laws allow them to use this to offset capital gains from other investments. However, the Wash Sales Rule prevents investors from immediately repurchasing the same or a substantially identical investment that they sold at a loss.

Because many traders sold their GBTC recently, their 30-window has not passed yet. Hence, they are unable to direct those funds into a Bitcoin Exchange Traded Fund (ETF). 

Anthony Scaramucci believes investors who dumped Grayscale Bitcoin Trust (GBTC) shares are unable to buy Bitcoin thanks to Wash Sales Rule.
Adam Back’s post about Anthony Scaramucci’s Bitcoin interview. Source: X

The Wash Sales Rule discourages traders from artificially creating capital losses for tax benefits while maintaining a similar investment position.

Meanwhile, the wash sale rule does not apply to cryptocurrencies. The IRS categorizes virtual currencies as property, not as securities. Hence, while crypto investors can sell their holdings at a loss and promptly repurchase them to harvest tax losses while maintaining their market position, others cannot don’t have this benefit. Hence selling GBTC to invest in Bitcoin ETF comes with the mandatory 30-day wait period. 

This stipulation, according to BlockStream CEO Adam Back, led to a temporary decrease in buying pressure in the market.

Are Grayscale Bitcoin Trust holders at a loss?

While the prospects of more capital flowing into Bitcoin may come as positive news, it may not turn out to be a correct analysis. 

As some users pointed out, most GBTC investors currently find themselves in profit, not loss, due to the positive performance of the asset. 

This implies that a significant portion of investors with no losses to harvest might not be affected by the Wash Sales Rule. Even if many of them did sell their GBTC, they need not have to wait for 30 days, as they wouldn’t be selling at a lower price.

Anthony Scaramucci believes investors who dumped Grayscale Bitcoin Trust (GBTC) shares are unable to buy Bitcoin thanks to Wash Sales Rule.
Those who purchased GBTC at the Bitcoin price peak will be in losses. Source: X

Meanwhile, Anthony Scaramucci also hit out at US Securities and Exchange Commission Gary Gensler for his anti-crypto stance. He did not hold back his punches against Senator Elizabeth Warren either, who is notorious for pushing for a wider legislative crackdown on cryptocurrencies. 

“We have overly politicized regulation in the country…This is all born from Elizabeth Warren. She cut a deal with Joe Biden in 2020. She dropped out of the race in exchange of having a lot of say over what happens in the banking industry and in the world of financial service. She was part of selecting Jannet Yellen [US Secretary of the Treasury] and obviously, her sidekick in Washington is Gary Gensler,”

 he said.  

Calling them “the regulatory access of evil,” Scaramucci called for a more non-partisan approach to regulations. The entrepreneur also insisted that these people would run towards crypto if they studied the technology instead of cracking down on it. 

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