- More often than not, investors sold and then bought back digital assets in December to lock in tax savings.
- According to information compiled by the NFT marketplace CryptoSlam, overall NFT sales increased to $678.2 million in December.
- The Y00ts NFT collection, in Petscher’s opinion, shone out as it moved from the Solana blockchain to live on Polygon in December.
Although there has been a significant increase in demand, the increase in global NFT sales in December was more likely the result of holders selling and purchasing back digital assets to lock in tax savings.
Data from the NFT aggregation website CryptoSlam show that total NFT sales surged to $678.2 million in December, the highest level since June. According to the report, NFT sellers increased by 11.8% from November while purchasers decreased by 8.6%.
According to Yehudah Petscher, the NFT relations strategist at CryptoSlam, what they are observing is likely just people still participating in NFTs reaping their end-of-year tax losses. To harvest losses, some services would buy NFTs for pennies. He continued that thousands of NFTs are being sold to these services by knowledgeable traders.
By selling their digital assets at a loss and then rebuying them, cryptocurrency investors can take advantage of a loophole in U.S. regulations known as “tax loss harvesting” to reduce their capital gains taxes. According to Benjamin Goldburd, a tax attorney with Goldburd McCone LL in New York City, this is now standard procedure.
According to data from CoinMarketCap, Bitcoin was trading at roughly $16,600 at the end of the year, down from$47,100 a year earlier, reflecting a decline in the price of Ether and Bitcoin in 2022. At the end of 2022, exchange rates for ether were around $1,200, down from $3,700 at the end of 2021.
As it transitioned from the Solana blockchain to live on Polygon in December, the Y00ts NFT collection also stood out, according to Petscher. With a current floor price of 450 SOL ($5,960), Y00ts is one of the most traded Solana NFT sets on the OpenSea marketplace.
According to data from DappRadar, global NFT sales volume last year almost precisely reached the 2021 peak, despite months of declining sales and lowering pricing. The data indicates that a brisk start to the NFT market in 2022 boosted the year-end total and helped make up for several poorer months.