Firstly, what I'm about to describe was a series of strategic blunders. There have been some bumps in the learning process of becoming comfortable with buying/selling stocks and cryptocurrency.
The situation is as follows. The numbers are examples...
I purchased $5000 of Bitcoin 2 weeks ago. 1 week ago the value had more than doubled. However, the value of the coin started spiraling downward so I sold it all for $10000. My plan was to reinvest all of it once the value had stabilized at a lower price, thereby accumulating more coins. However, I forgot that this would become a taxable event, so I suddenly was on the hook for $5000 of profits.
Regardless of this blunder, I stuck to the plan of buying back in. However, the cost stopped going down, it went up a bit... ouch! Regardless, FOMO took hold hard and I reinvested the $10,000 the next day.
The value of the $10,000 has since dropped to $8000. This bitcoin game turns out to be a bit too dramatic for me, so I plan to sell half of it, $4000, and reinvest that into Index funds.
My question is this.... will the portion I sell, which will be a loss of $2000, help cancel out some of the $5000 gain couple weeks earlier?
I think so, but I'm not sure because of the odd order of transactions.
Thank you.
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