With its monkey look and blue bandana, CryptoPunk’s NFT #4156 has rare attributes that make it one of the most valuable non-fungible tokens in one of the most popular pools in the space, proving its market value to be around $10 million USD under current market conditions.
However, an anonymous collector sold the item for just $3.3 million USD last Friday, the 15th, realizing a loss of nearly $7 million USD that caused surprise among experts and sparked huge discussions on Crypto Twitter.
Both the market price and the amount at which Punk #4156 was sold may seem offensive to retail investors who aren’t part of a select group of “blue-chip” NFT collectors, and even more so in the middle of a bear market.
However, iconic CryptoPunks have gained such a unique place in 21st century digital culture that rare NFTs like Punk #4156 can fetch immeasurable values โโfor some experts. So much so, that the collector who ended up getting rid of the item paid over $10 million for it 7 months ago, as one user explained on Twitter when Punk #4156 was listed for sale, but had yet to find a buyer.
$3.2 million is a joke for that monkey but it might be tempting for the bearer to accept it.
Gaining +169ETH is nothing here, but he bought that for just $10.26M when ETH was worth $4111.
Accepting this offer will result in a loss of $7 million. https://t.co/JvhCpHWQzk pic.twitter.com/GC3NzHlWMY
โTank (nfttank) July 15, 2022
$3.2 million is a joke for this monkey, but it might be tempting for the owner.
Gaining +169ETH is nothing here, especially since he bought that monkey for $10.26M when ETH was worth $4111.
Accepting this offer means losing $7 million.
โTank (nfttank)
The holder of Punk #3938’s pseudonym lamented the value of the bid, stating that the NFT’s “holy grail of NFTs” could be worth up to $25 million. Directly below, in the comments, another pseudonymous user compared #Punk 4156 to a “prototype of Thomas Edison’s work.”
IMO it’s like selling a prototype of Thomas Edison’s work. A permanent part of history indeed. This is the best app imo. When the expectations have already been completed by being the genesis of the fruits
– CrYpTsKii (Cryptskii) July 16, 2022
Thanks… I’ve been saying this all day. The market is so bearish that collectors are selling the holy grail of all NFTs. Easily worth 25 grand, in my opinion.
– borovik. eth (@3orovik)
–
In my opinion, this is like selling a prototype of Thomas Edison’s work. permanent part of history. This is the best benefit in my opinion. When expectations have already been fulfilled for being the genesis of the fruits
– CrYpTsKii (Cryptskii)
Tax evasion
At face value, the transaction caused the seller to lose 67% in dollars. However, the face value in Ethereum (ETH) has become a profit, albeit a fictitious one, as the NFT was bought for 2,500 ETH in December and is now being sold for 2,169 ETH. For bureaucratic reasons, negotiation can be seen as a masterstroke.
If the collector declared on the annual income statement a loss of $7 million in the purchase and sale transaction of Punk #4156, the transaction could have been financially beneficial.
Although, for tax purposes, the IRS may consider losses realized in dollars at the time of the NFT sale, the seller does not need to convert the ETH into USD to actually realize the loss. Thus, he can wait for the appreciation of ETH to reduce his losses or use the amount to carry out new transactions.
This type of intentional loss is a common practice used by US traders to reduce their declared capital gains. In the case of the previous owner of Punk #4156, a $7 million reduction in capital gains income could have reduced taxes for the seller. This implies additional tax benefits. Known as “tax loss harvesting” in the US, the master strike by experienced traders was recognized by other Twitter users.
He’s really, really smart about harvesting tax losses if he’s sure he’s not going to make a positive return on that investment anytime soon.
– ๐๐๐๐๐๐ (@MISHKAcreates) July 15, 2022
In fact, it’s smart to take the tax loss if he’s certain he won’t be making a positive return on that investment anytime soon.
– ๐๐๐๐๐๐ (@MISHKAcreates)
Meanwhile, the self-declared buyer of Punk #4156 took to Twitter to announce that the acquisition is an investment with a long-term focus. The user, who already owns Bored Ape Yacht Club (BAYC) NFTs, said he lacks CryptoPunk to turn his savings into โgenerational wealth.โ
The day before Punk #4156 sold, another CryptoPunks NFT sold for $2.6 million, revealing that despite the downturn in the non-fungible token market, โblueโ collectibles are still in high demand in the market.
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