7 out of 10 Crypto Investors Recorded Losses in 2022

The year 2022 was a challenging period for the cryptocurrency market in Spain, experiencing large drops and significant losses for many investors. According to the latest report presented by TaxCripto, an application specialised in preparing reports for cryptocurrency tax returns, more than 70% of cryptoasset investors in Spain declared losses in their tax returns during that year. In addition, those who invested in cryptocurrency futures and derivatives also suffered losses, with 91% of traders in these assets reporting losses in 2022. This situation led many investors to realise their losses before year-end to reduce the tax burden.

TaxCripto founder, CFO and tax advisor Alberto Miranda suggested that after the poor performance of the cryptocurrency market in 2022, it made sense to consider realising losses and offsetting them with gains in other assets from a tax perspective. Miranda also emphasised the importance of proper tax planning before year-end to maximise profits and minimise losses for investors.

The cryptowinter

2022 was a year characterised by what has been dubbed “cryptowinter” or “crypto winter”, which refers to the widespread drop in the price of cryptocurrencies. The most important digital currencies, such as Bitcoin, Ethereum, XRP, Cardano or Solana, experienced losses of close to three quarters of their value. For example, Bitcoin, the most popular asset, saw its value plummet by as much as 70 %. This marked a drastic change for a cryptocurrency that had revolutionised the financial markets during its heyday, trading at $67,734 on 9 November 2021 and falling to around $20,000 eight months later, the lowest level since December 2020.

The causes of the “cryptowinter” were linked to global macroeconomic factors, such as inflation fuelled by the COVID-19 fallout, the supply crisis and the Russia-Ukraine war. These events triggered a massive outflow of investors from the cryptocurrency market, which triggered a massive sell-off of cryptocurrencies. As a result, supply outstripped demand for cryptocurrencies, leading to a significant decline in the value of Bitcoin, Ethereum and other digital currencies.

TaxCripto’s report also revealed interesting data on the platforms used by Spanish investors to invest in cryptocurrencies. Binance stood out as the leading platform in Spain, accounting for 46% of all platforms integrated in TaxCripto and 85% of recorded cryptocurrency transactions during the tax campaign. Coinbase ranked second with 10% and Kraken followed with 7%. On the other hand, the Spanish platform Bit2ME had a minimal presence with only 2%.

In terms of the most used cryptocurrencies, Binance Coin (BNB) topped the list, present in 18% of the transactions integrated in TaxCripto, followed by Tether (USDT) with 11% and Bitcoin with 10%. In terms of transaction types, Spanish investors showed a preference for staking (46%) and cryptocurrency swaps (39%).