Year-End Surge for NFT Tax-Loss Harvesting Platforms

The NFT market, facing a challenging year with prices stagnating, has seen a rise in tax-loss harvesting platforms towards the end of the year.

NFT Trades Remain Stalled

Despite recent signs of recovery, weekly NFT trades have plateaued between 100,000 and 150,000 since May, contrasting sharply with the early 2022 peak of over 500,000, according to Dune Analytics.

Tax-Loss Harvesting Gains Traction

In response to the downturn, platforms like Unsellable have emerged, offering tax-loss harvesting services for NFT holders. Users can sell depreciated NFTs, reducing overall capital gains tax. Blockworks-verified data indicates a surge in the adoption of these services.

Unsellable's Approach

Unsellable, founded in 2022, charges around $2 in Ether plus gas fees to acquire undervalued NFTs, especially those from abandoned projects. Recent data shows Unsellable purchasing an average of 1,000 NFTs in the past few days, approaching 10,000 for December.

Changing Tax Strategies

Unsellable's co-founder, Skyler Hallgren, notes a shift in investor behavior, stating that while traditional investors focus on tax loss harvesting in December, newer web3 investors are just starting to grasp tax-savvy approaches in crypto and NFT investments.

User Experiences Success with Tax-Loss Harvesting

An interviewed user, MoneyPrinterGoBrrr, reveals utilizing tax-loss harvesting to mitigate losses from their NFT portfolio. Despite overall profitability, some NFTs faced challenges, leading to offloading on platforms like Harvest.art.

Diverse Platforms Offer Solutions

Apart from Unsellable and Harvest.art, alternatives like NFT Loss Harvestooor and The Junkyard provide free or reward-based options for tax-loss harvesting. Sol Incinerator allows Solana-based NFT burning, gaining popularity with a 70% increase in transactions.

Increased End-of-Year Activity

Sol Incinerator's recent surge in transactions, up nearly 70% from the previous week, and the year-end uptick in Harvest.art's usage highlight the growing interest in tax-loss harvesting solutions.

Transparency and Audits

While some platforms, like Unsellable and Junkyard, have undergone audits for transparency and security, others lack public audit information. Users are advised to exercise due diligence before engaging with any blockchain service.

As 2023 approaches, NFT investors are turning to tax-loss harvesting platforms to navigate market challenges. While these services offer solutions for mitigating losses, users are urged to carefully assess each platform's transparency and security features.