Our weekly crypto newsletter is here! In this issue, you will learn more about the Ronin hack and DCA as a trading strategy. We also have a brief summary of our TaxTuesday conversation if you’ve missed it!
Axie Infinity’s Ronin Network loses 173 600 ETH to a hacker
The Axie Infinity blockchain, better known as the Ronin Network, was hacked, and 173,600 Ethereum tokens (over 600 million at today’s price) got drained. The attack happened on March 23 but was revealed almost a week later, on March 29, when a user failed to withdraw 5,000 ETH. Moving all that ETH won’t be easy for the hacker since almost all big exchanges already require KYC. According to a report from CryptoPotato, some of the funds were moved to Crypto.com, FTX, and Huobi, with representatives from all of them promising to take action.
The Ronin bridge between the Axie blockchain and Ethereum is currently closed but will reopen at a later date. Sky Mavis, the studio behind Axie Infinity, is now “working with law enforcement officials, forensic cryptographers, and our investors to make sure there is no loss of user funds.”
Trading tip: What is DCA?
You’ve probably heard the term “DCA” being tossed around, but what does it really mean? It’s definitely not “don’t care anymore.” DCA stands for “dollar cost average,” a popular investment strategy. According to the DCA tenets, investing everything at once is wrong. Instead, you should be buying small amounts over long periods, even when there’s high volatility in the market – which is especially salient in crypto. By utilizing DCA you can increase your overall profit but there’s also a chance of missing out on the perfect long entry because you didn’t go all in during a liquidation event.
DCA is perfect for anyone who just doesn’t have the time to follow the market all day long. It encourages you to be buying in the red, which is easier said than done. Statistically, that’s the best buying opportunity for optimum long-term ROI.
If you want to learn more about trading strategies, check out our Crypto 101 Guide.
TaxTuesday with David Canedo, CPA
In case you missed our last TaxTuesday AMA series on March 29, we have a brief summary for you here! If you have traded NFTs, we advise you to file for a tax extension as there are still many uncertainties surrounding NFT taxation by the IRS and other tax authorities, and all but one crypto tax platform still do not support NFTs. The one that does, supports only ETH NFTs, so if you’ve traded NFTs on Solana, you’d have to wait nevertheless.
There are four ways in which you can reduce your crypto taxes. One of them is via ACCOINTING.com’s Trading Tax Optimizer, which gives you the option to plan and reduce your short-term gains or harvest losses. Another is to donate some of your coins and get a tax deduction. A third way would be through a crypto IRA and, finally, through a Blockchain opportunity zone fund.
If you want to learn more about crypto taxes, don’t forget to check out our Crypto Tax Guide.