Daily Archives: August 14, 2021

The day that bitcoin becomes less volatile is the day that mass adoption will begin. Or is it that mass adoption will minimize volatility on bitcoin?

This is one of the most popular debates in our space as market participants try to speculate when the volatile price action of bitcoin will get smoother. Those who know me are familiar with my stance on the subject: Mass adoption should eventually smooth the volatility curve and price swings on bitcoin, but this adoption could increase volatility significantly in the near term, as the expanding ecosystem continues to adjust to the inflow of new market participants.

As the Bitcoin ecosystem grows and evolves, new players continue to enter with different characteristics from one another, something that can bring disruption or even stress in an ecosystem that has been used to a different reality for such a long time.

Some of the lowest levels of volatility, in fact, occurred during the early adoption stage (2013 to 2017) of bitcoin, when the market cap was below $20 billion and the network was dominated by early believers in a buyers-only market. Then suddenly, volatility struck with a massive sell off that shook the world in 2018 and took many people out of the market.

But what happened prior to the sell off that triggered that event? Many things have been said about this, but few approaches have acknowledged a key event that took place a little earlier, in December 2017: the introduction of the first bitcoin futures product, which started trading on the Chicago Mercantile Exchange.

This was an event that for the first time created a new reality. The ability to short-sell bitcoin on a large scale. In other words, the ability to sell bitcoin that you had never previously owned (even if that bitcoin was never real, but rather just a price tracker).

That consisted of the first expansion of the Bitcoin ecosystem, which came to counter the prior reality of a buyers-only market.

The growing popularity of bitcoin as an asset class on its way to mass adoption triggered the creation of the futures market and the creation of a new type of market participant, the short seller, something that led to a sell off we all remember.

Source: TradingView

Moving forward, as bitcoin entered a new market cycle, the pain of 2018s sell off took most momentum players out of the system and allowed the maximalists to regain the majority composition of the network.

Something that led to the gradual rejuvenation of prices all the way through mid-2020, when bitcoin became, for the first time, the coolest kid in town and mass adoption started to seem like a potential reality.

But, before we address the present, lets take a look at how volatile bitcoin was as it headed toward the CME listing, the price ease and the return to relativity for people outside the network.

Source: Bloomberg Terminal

Bitcoin was quite volatile, some might say, as the network was preparing itself for mass adoption. But how does this compare to the price action of mid-2020 to the present, when a record inflow of market participants joined our network and mass adoption began to start getting triggered?

Source: Bloomberg Terminal

The record inflow of new market participants led to record volatility in the network, a volatility that does not seem ready to leave the system yet. Why? you might ask. Did we not always believe that mass adoption will bring balance in the system? How come bitcoin, at a $100 billion, $300 billion or even $1 trillion market cap, is more volatile than bitcoin at a $20 billion market cap?

The answer is simple: The market participants now have different utilities and purposes than they did in the early adoption stage, and the network is having a small shock as it is trying to absorb the growth, similar to acne on a teenagers face as their body grows into that of an adult.

Bitcoin with a market cap in the hundreds of billions of dollars has many new players. Players with different roles and beliefs, with the maximalists accounting now for a significantly smaller part of the pie. The ecosystem has evolved from a buyers-only market that welcomed initially long-term investors, to welcome momentum traders and speculators, proprietary desks and liquidity providers, lenders and a series of other new roles that are in fact very much needed for the long-term purpose of mass adoption, but who have brought extreme volatility in the near term as the network tries to adjust to the new, constantly-evolving reality.

All of that, as one question continues to dominate the market: How can we minimize volatility on a network that has grown from an infant into a baby, but still has a long way to go until its fully developed?

The answer is simple: risk management.

Risk management from an individual perspective is the most significant assistance that each of us can offer to bitcoin in order for it to continue to grow and accept new members under lower volatility and smoother price swings.

When it comes to risk management, the number-one rule is understanding your risks. But before we understand them, we actually need to acknowledge them.

Denial of risk refers to cognitive ways to develop adaption to risky behaviors by rejecting the possibility of suffering any loss. -Peretti-Watel

It aint what you dont know that gets you into trouble. Its what you know for sure that just aint so. -Mark Twain

What if the accumulated total of the bitcoin positions in the world were not based on random outcomes, but instead on scenarios known ahead of the position establishment?

What if the liquidation of that leveraged position could have been prevented?

What if the profit of a miner was locked one year out ,or 70% of the value of your portfolio was secured?

Then confidence would dominate the market and the next sell off would not have been as bad as the prior one.

Risk management is a vote of confidence in bitcoin.

Why? Because confidence is derived by known outcomes and known outcomes are an output of risk management.

Risk management is the answer to extreme volatile swings and lesser sell offs. The moment the downside is not detrimental to our portfolios or lives savings, is the moment that liquidations will be avoided and panicked selling will seize.

The moment everyone individually manages their risk is the moment that price normalization will be attained and confidence will be achieved in the broader market.

But how do we even approach risk management?

For starters, risk management begins with position placement and trade execution. Or by simply avoiding an overleveraged situation that you have absolutely no control over.

Risk management occurs by making sure that we do not engage in a trade that, if gone wrong, will threaten the financial wellbeing of ourselves and our families.

Risk management occurs when you put a stop loss on your leveraged position instead of doubling down or hoping that prices will return back to where they were.

Risk management occurs when you quickly realize that you are the one who is wrong, not the market, and accordingly adjust your exposure.

In a more moderate approach, risk management can be achieved through the derivatives markets, when you buy a put option in order to establish a maximum loss scenario or a minimum gain. Or simply when you sell some futures contracts for part of your physical position in order to protect your portfolio against nearby volatility and potential adverse market conditions.

Just like anything else in life, risk management should work as a damage-aversion mechanism, not as an aftermath solution. Our goal should always be to avoid our house catching on fire, not putting the fire out once its too late.

This is a guest post by Anestis Arampatzis. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

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Bitcoin Price Volatility And How Risk Management Is A Vote Of Confidence - Bitcoin Magazine

Bitcoin Gains Ground Ahead Of The Weekend

Bitcoin is currently trying to settle above the resistance level at $46,000 while crypto markets are moving higher.

Ethereum quickly gained upside momentum after the recent pullback and is trying to settle back above $3,250. RSI is still in the overbought territory despite the pullback, but there is enough room to develop additional upside momentum.

Dogecoin continues its attempts to settle above the resistance level at $0.2750. XRP managed to get back above $1.00 and is trying to settle above $1.04. In general, the crypto market mood is bullish, and altcoins look very strong as Bitcoin Dominance continues to decline and looks ready to breach the 45% level.

Bitcoin received support near $44,000 and moved back to the resistance at $46,000. RSI remains in the moderate territory, and there is enough room to develop additional upside momentum in case the right catalysts emerge.

If Bitcoin manages to settle above $46,000, it will continue its upside move and head towards the resistance level at $47,500. A move above $47,500 will open the way to the test of the resistance at $50,000. No important levels were formed between $47,500 and $50,000 so this move may be fast.

A successful test of the resistance level at $50,000 will push Bitcoin towards the next resistance at $51,500. It should be noted that a move above the psychologically important $50,000 level will likely attract more speculative traders. In case Bitcoin gets above $51,500, it will head towards the next resistance at $53,000.

On the support side, the nearest support level for Bitcoin is still located at $44,000. This support level has already been tested several times and proved its strength. In case Bitcoin declines below this level, it will head towards the next support which is located near the 20 EMA at $42,000. A move below this level will push Bitcoin towards the next support level at $41,300.

For a look at all of todays economic events, check out our economic calendar.

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This article was originally posted on FX Empire

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Bitcoin Rebounds After Pullback And Tests Resistance At $46,000 - Yahoo Finance

Twitter and Square CEO Jack Dorsey, a noted superfan of Bitcoin, claimed on Monday that the cryptocurrency will eventually unite the world. Yes, really.

On Monday afternoon, an amendment to the Senates infrastructure package that would have expanded the governments involvement in cryptocurrency was blocked. Shortly after that, Dorsey tweeted that #Bitcoin will unite a deeply divided country. (and eventually: world).

Dorsey didnt specify which country, but given that hes been tweeting a lot about the amendment since it failed, it seems likely hes talking about the US. He hasnt yet explained further.

This isnt the first time Dorsey has touted Bitcoin as a vague solution to big problems. At a Bitcoin conference in July, he said that my hope is that [Bitcoin] creates world peace. He elaborated:

Elon said it earlier. We have all these monopolies of violence, and the individual doesnt have power. The amount of cost and distraction that comes from our monetary system today is real, and it takes away attention from the bigger problems, some of the bigger problems that Elon is trying to solve like getting us to multiplanetary humanity. All these distractions that we have to deal with on a daily basis take away from all those bigger goals that affect every single person on this planet, increasingly so. It may sound a little bit ridiculous, but you fix that foundational level and everything above it improves, in such a dramatic way. Its gonna be long term, but my hope is definitely peace.

It remains unclear how Bitcoin, a cryptocurrency valued at more than $46,000 for a single coin and one that is mined at a massive cost to the environment, can help solve some of the worlds foundational problems.

Dorsey has been preaching the gospel of Bitcoin for some time now, displaying a Bitcoin clock while testifying before Congress, opening a new Bitcoin business unit for Square called TBD, and even suggesting in 2018 that Bitcoin will become the worlds single currency within 10 years. It seems likely hell continue to beat the drum of Bitcoin for the foreseeable future maybe soon hell even let people buy ads on Twitter with it.

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Jack Dorsey says Bitcoin will unite the world, but doesnt say how - The Verge

The Nasdaq-listed cryptocurrency exchange Coinbase says that it wants to be the Amazon of assets and list every legal crypto asset out there. The company has outlined two major long-term trends affecting its business.

Coinbase revealed its plan during the Q2 2021 earnings call Tuesday. CEO Brian Armstrong explained: We at Coinbase always think about longer-term cycles of crypto Were always looking at the long-term trends. He described two key trends affecting Coinbase.

The first one is that were continuing to see this trend of people using crypto for more and more things beyond trading, Armstrong detailed. He added that For example, we now have 1.7 million users doing staking in crypto, which is a way to earn a yield on your assets.

The CEO continued, The second big trend were seeing is this idea of Coinbase embracing decentralization, elaborating:

We want to be the Amazon of assets, list every asset out there in crypto thats legal. There are thousands of them today. There are eventually going to be millions of them. This is all under the theme of embracing decentralization.

Armstrong emphasized: We have a very rigorous process weve created on the compliance and the legal and cybersecurity evaluation of these assets to make sure they comply with those standards, but once we get comfortable with that, we want to list various assets that meet those listing criteria.

He further noted: Bitcoin and ethereum still make up about 50% of our trading volume and the other 50% is the long tail of all the other assets that we support. No single one of those long-tail assets accounts for more than 10% of our trading volume so its really starting to become quite a diverse set of assets out there.

The Coinbase executive mentioned that in the second quarter, his platform listed 22 new coins, including dogecoin (DOGE). He opined:

Our overall approach is were agnostic about which assets are going to win, we really just want to support every asset thats legal for our customers.

In Q2, the company raked in $2 billion and formed partnerships with notable people and companies including Elon Musk, Spacex, and PNC Bank. At the end of June, the company said it wanted to launch an Apple-like app store for cryptocurrencies.

What do you think about Coinbases plan to become the Amazon of crypto? Let us know in the comments section below.

Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Coinbase Aims to Be the 'Amazon' of Crypto, CEO Says Exchange Wants to List All Legal Crypto Assets Bitcoin News - Bitcoin News

Last week, see here, I showed the Bullish Elliott Waves (EWP) option for Bitcoin (BTC), looking for a rally to initially mid-$40Ks (its 200-day simple moving average (SMA)) before a multi-week pullback should happen. In finer detail, I had placed a wave-iv of wave-1 label at around the August 3 low of $37718, expecting a wave-v of 1 higher to commence soon. Bitcoin bottomed a daily later at $37526 and is now trading at $46.5K. Thus, so far, so good.

Figure 1. Bitcoin daily chart with detailed EWP count and technical indicators.

Last week I found, Because one can always find a bullish or bearish data point to support ones biased view, it is the weight of the evidence approach that allows for a much more objective interpretation. In this case, it is rather apparent the weight of the evidence is predominantly bullish. All BTC now needs to do is reclaim its 200d SMA. Thus, my objective analyses, which my premium crypto trading members bank on, pointed in the right direction, and Bitcoin has now reclaimed its 200d SMA.

Given that the daily chart is still Bullish

price is above all its SMAs and those are rising.

Note the four green arrows at the upper left corner of the chart. Its called the traffic light, and it means GO when it is green.

And the currency is above its Ichimoku cloud as well,

A possible more Bullish alternative should be considered. Namely, the current red wave-v can subdivide higher to $58-59K. But, I find that option less likely because of the divergences on the technical indicators and overbought money flow. Thus, a break below the 200d SMA from current levels is a first warning sign for the bears that the (black) major-2 wave is likely underway. In contrast, a break below Mondays low ($42818, red horizontal arrow) increases those odds even more as the cryptocurrency makes lower lows.

Bottom line: Last week, I found, If BTC can hold above $35495 from now on (the red wave-i high made on June 24) and rallies towards its 200d SMA from around current levels, then the chart shows a perfect setup for five waves higher since the June 22 low. That would significantly increase the odds for a pullback, wave-2, before a solid rally to ideally new all-time highs; wave-3. The cryptocurrency did just that and even gave us a little more upside. Thus my preferred POV remains BTC should see a decent pullback soon before rallying again. Alternatively, since upside surprises and downside disappoints in Bull markets, a continued $58-59K is not entirely unlikely. The Bears will now have to break $30K to target $20K.

Story continues

For a look at all of todays economic events, check out our economic calendar.

This article was originally posted on FX Empire

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Bitcoins Rally to $90K+ Back on Track - Yahoo Finance

Bitcoin price found support near USD 43,800 and started a fresh increase. BTC surpassed the USD 45,500 and 46,000 resistance levels. It is currently (12:08 UTC) showing positive signs, but it must clear USD 46,700 for more gains.

Similarly, most major altcoins started a fresh increase after a short-term downside correction. ETH climbed back above the USD 3,150 and USD 3,200 resistance levels. XRP settled above USD 1.00 and it might test USD 1.08.

Total market capitalization

After a short-term downside correction, bitcoin price found support near USD 43,800. As a result, BTC started a fresh increase above the USD 45,000 resistance. It even broke the USD 46,000 resistance. The main resistance is still near the USD 46,500 and USD 46,700 levels, above which the price could rise further towards USD 48,000.On the downside, an initial support is near USD 45,500. The first key support is now forming near the USD 45,000 level. Any more losses may possibly lead the price towards USD 43,800.

Ethereum price remained well bid above the USD 3,000 support level. ETH started a fresh increase and it climbed above the USD 3,150 resistance. The bulls even pushed the price above USD 3,200. If the current trend remains intact, the price could rise towards the USD 3,350 level.If there is a fresh decline, the bulls might remain active near the USD 3,150 level. The next major support is near USD 3,080, below which the price might revisit the USD 3,000 support.

Cardano (ADA) outperformed bitcoin and ethereum, with a major move above the USD 2.00 resistance. It has also surpassed tether (USDT), becoming the third largest cryptoasset by market capitalization (USD 65bn). ADA gained almost 15% and it seems like it could test USD 2.10. The next major resistance is near USD 2.20, above which the price might test USD 2.40. On the downside, an initial support is near the USD 2.00 level, followed by USD 1.98. Litecoin (LTC) is up almost 7% and it surpassed the USD 180 level. The current price action suggests the price could test the USD 192 resistance level. The main hurdle for the bulls on the upside is near the USD 200 level. If there is a downside correction, the USD 172 level may possibly act as a support.Dogecoin (DOGE) was able to clear the USD 0.275 and USD 0.280 resistance levels. The price could even surpass the USD 0.288 resistance and accelerate higher towards the USD 0.300 level. Conversely, the price may possibly decline towards the USD 0.265 support level.XRP price started a fresh increase after a short-term downside correction below USD 0.980. The price is back above USD 1.00 and it even tested the USD 1.05 resistance. The next major resistance is near USD 1.10, above which the price might rise towards the USD 1.20 level.

Many altcoins are up over 5%, including QTUM, SNX, GRT, SUSHI, VGX, MKR, AVAX, WAVES, FTM, CHZ, XLM, DCR, SOL, and DGB. Out of these, QTUM rallied over 15% and it broke the USD 12.00 resistance.

To sum up, bitcoin price is back in a positive zone above USD 45,500 and USD 46,000. If BTC settles above USD 46,700, it could continue to rise in the coming sessions._____

Originally posted here:
Bitcoin and Ethereum Regain Traction, Cardano Flips Tether - Cryptonews

The cryptocurrency market charged full steam ahead on Aug. 11 as the price of Bitcoin (BTC) climbed to $46,743, and bulls are now taking aim at the $48,000 resistance level as the next target.

Data from Cointelegraph Markets Pro and TradingView shows that the biggest gainers over the past 24 hours were IoTeX (IOTX), WINk (WIN) and Dent (DENT).

IOTX continued its hot streak on Wednesday as the altcoins took the position as the top 24-hour gainer for the third day in a row. The gains appear to be connected to the Aug. 11announcement that Coinbase would be listing the token.

Data from Cointelegraph Markets Pro shows that the altcoin has rallied 322% since bottoming at $0.0293 on Aug. 10. The current surge lifted IOTX to a new all-time high at $0.124 on Aug. 11 as its 24-hour trading volume reached $2.75 billion.

VORTECS data from Cointelegraph Markets Pro began to detect a bullish outlook for IOTX on Aug. 10, prior to the recent price rise.

The VORTECS Score, exclusive to Cointelegraph, is an algorithmic comparison of historic and current market conditions derived from a combination of data points, including market sentiment, trading volume, recent price movements and Twitter activity.

As seen in the chart above, the VORTECS Score for IOTX elevated into the green zone and reached a high of 70 on Aug. 10, around five hours before its price increased 322% over the next day.

WINk, a Tron-based oracle project, had the second-largest gain in the past 24 hours. The likely catalyst behind the move is growing community excitement over new staking and liquidity provider opportunities, as well as the project'sgaming and nonfungible token features.

Data fromTradingView shows that the price of WIN rallied 80% from a low of $0.00046 on Aug. 10 to an intraday high at $0.00084 on Aug. 11, as its 24-hour trading volume increased by 343%.

WINkLink protocol has now completed its transition from being a strictly gaming-focused platform to a comprehensive oracle system capable of connecting real-world data through its smart contracts.

Related: US dollar downturn aids Bitcoin bulls before $50K BTC price showdown

Dent, a mobile-focused protocol, rounded out the top three performers in the past 24 hours by putting on a 30.5% gain to $0.000456 as its 24-hour trading volume spiked by 200%.

VORTECS data from Cointelegraph Markets Pro began to detect a bullish outlook for DENT on Aug. 7, prior to the recent price rise.

As seen in the chart above, the VORTECS Score for DENT climbed into the green zone beginning Aug. 7 and reached a high of 75 on Aug. 9, around 44 hours before its price began to increase 44% over the next day.

The overall cryptocurrency market cap now stands at $1.935 trillion, and Bitcoins dominance rate is 45%.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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Altcoins soar while Bitcoin bulls gather strength to attack $48,000 - Cointelegraph

August 13, 2021 Share Print

Bitcoin correction short-lived but momentum already waning

Bitcoin is having another run at $47,000 at the end of the week.

The pullback was quite shallow and short-lived in the end although it could still face resistance at the previous peak, where were already seeing momentum slip a little.

A failure to break $47,000 wouldnt be any concern at this stage and could just be indicative of the correction having not run its course. The rally is looking perfectly healthy regardless of whether we see a breakout or a pullback.

Even a move below yesterdays lows could just signal a bigger correction back to the $41,000 region, based on the size of the double top that would have formed, which would see it run into prior resistance and the 61.8 fib of the August lows to highs.

A move above $47,000 and resistance remains the same $50,000-51,000 in line with prior support and resistance, and the 61.8 fib April highs to June lows.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all.You could lose all of your deposited funds.

Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary.His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News.Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.

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Bitcoin - Larger correction on the cards? - MarketPulseMarketPulse - MarketPulse

Legendary frontman of the band Kiss, Gene Simmons, is discussing his crypto journey and when he dove into the sector.

In a new interview with CNBC, the rockstar says that he jumped into crypto at the beginning of the Covid-19 pandemic after having a conversation with noted Bitcoin bull and Gemini crypto exchange co-founder Tyler Winklevoss.

I went in big. I put in a few million into Bitcoin when it was around $10,000.

Simmons calls himself a hodler and predicts that Bitcoins price will reach as high as $60,000 by the start of next year. Simmons also says that when Bitcoin took its May plunge to under $30,000, he bought more.

And Im whats called a hodler By the beginning of next year, well be at $55,000 to $60,000. So Im all in. Im putting more in. When there was a big dip and it went down to under $30,000 or something, I put in more.

Bitcoin is trading at $45,295 at time of writing, according to CoinGecko.

The Kiss lead singer also says he holds Ethereum (ETH) in his portfolio, which he states to have bought at around $900. He says he has around 14 ETH.

In the past, Simmons has copped to owning the Bitcoin fork Litecoin (LTC), Dogecoin (DOGE) and digital payments asset XRP.

Earlier this year, Simmons said he had invested $300,000 in Ethereum competitor Cardano (ADA).

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Featured Image: Shutterstock/Cesare Andrea Ferrari

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Rockstar Gene Simmons Bitcoin and Ethereum Has Appreciated Massively Here Are the Prices He Got In At - The Daily Hodl

Coinbase launched its own debit card in an effort to promote the use of cryptocurrencies in payments as well as investing.

Coinbase

Some of the biggest credit card companies on the planet are trying to make it easier than ever to spend and earn bitcoin.

But accountants and financial advisers tell CNBC there is a massive catch. Every time you swipe one of these crypto cards, you're logging a "taxable event."

"The one thing that a lot of people don't realize is that whenever you spend cryptocurrencies to buy a cup of coffee, or any type of consumer item, that triggers a capital gains event," said Shehan Chandrasekera, a CPA and head of tax strategy at CoinTracker.io, a digital currency tax software company that helps clients track their crypto across virtual wallet addresses and manage their corresponding tax obligations.

There's always a difference between how much you paid for the cryptocurrency, which is the cost basis, and the market value at the time you spend it. That difference can trigger income capital gains taxes, in addition to the other taxes you have to pay, such as sales tax.

But a lot of people don't seem to care about the tax headache.

Visa, which partners with Circle, BlockFi and Coinbase, told CNBC in July that more than $1 billion worth of cryptocurrency was spent by consumers globally on goods and services through their crypto-linked cards in the first six months of 2021.

Meanwhile, this summer, MasterCard will launch a credit card with crypto exchange Gemini, co-founded by billionaires Cameron Winklevoss and Tyler Winklevoss.

The perks are indeed enticing: no annual fees, up to 4% back in crypto rewards whenever you buy something, and it offers an easy off-ramp for your crypto cash.

But perhaps the biggest reason these tax implications aren't getting people down is that they have no clue they are racking up a tax bill every time they use their card.

"Some people are like, 'Oh, I'm not selling my crypto, so I don't have to pay capital gains taxes.' But that's completely wrong," said Chandrasekera.

The IRS treats virtual currencies such as bitcoin as property, meaning that they are taxed in a manner similar to stocks or real property.

"Anytime you receive, sell or exchange cryptocurrency, income would need to be recognized," according to Shivani Jain, a certified public accountant and partner at accounting, tax and advisory firm Sax LLP.

"When you make a payment using a Coinbase card, you are deemed to have sold the cryptocurrency, which results in a tax event," she said.

The government essentially says that if you buy something with crypto, it is as though you liquidated your crypto, no different from selling any other property. The IRS also doesn't care how small the transaction is it's still taxable.

"There's no minimum for capital gains. It applies for even a penny of gains or even less than a penny, in the case of a micro transaction," said Neeraj Agrawal of Coin Center, a cryptocurrency policy think tank.

While it is probably unlikely that the IRS is going to come after you for a penny, Agrawal said, it does mean that you are technically not complying with the law if you make a penny's worth of gains when you buy a coffee and fail to track that as a gains event.

Experts tell CNBC that it is nearly impossible for bitcoin to work more like the cash that it was intended to be with rules like these, which are difficult to comply with completely.

"The current property treatment is very bad when it comes to consumer adoption of cryptocurrency as a method of payment," said Chandrasekera. "And it is your responsibility to figure out the taxes, to keep good records of the cost basis and sales price."

Agrawal said a solution is creating a "de minimis exemption" for crypto transactions, similar to what was proposed in the Virtual Currency Fairness Act introduced in the House last year. A de minimis exemption would mean that a set amount, perhaps up to $200, of capital gains for crypto-based transactions would be excluded from the capital gains reporting rule.

There are a few loopholes to avoid paying taxes every time you swipe your crypto card.

Some cards, for example, are tied to a user's stablecoin holdings. Stablecoins are a specific subset of cryptocurrencies that have a value pegged to a real-world asset, such as a fiat currency like the U.S. dollar or a commodity like gold.

"There are no capital gains taxes, because it's pegged to the U.S. dollar," explained Chandrasekera.

While there can be daily fluctuations of a few pennies, Chandrasekera says that in the end, it is immaterial, since it tends to balance out. "There could be days that you're spending $0.98, others when you spend $1.02. So on an annual basis, it kind of zeroes things up," he said.

Crypto rewards also offer another way to counteract some of these capital gains taxes.

When you spend with one of these cards you can earn up to 4% back in a crypto reward of your choosing. Those crypto rewards have the potential to appreciate more than a reward denominated in a fiat currency such as the U.S. dollar. And like most card-based reward programs, the amount earned will likely not be taxable.

"As of now, the IRS has no guidance on how crypto rewards for spending will be taxed. However, if we look at how the IRS treats credit card rewards, we see that they are treated as rebates or discounts and are generally not taxable," said Jain.

That means that in the interim, until further IRS guidance is available, it would be reasonable to treat crypto rewards in a similar fashion, according to Jain.

Chandrasekera agrees that these rewards are probably not going to be taxed because crypto rewards are not an earned income to the spender but are instead considered a discount on the sales price of whatever they're buying.

And then, of course, there is the potential for the transaction to amount to a capital loss, which is the flip side to the capital gains obligation. Chandrasekera says that these types of crypto debit card transactions would actually result in tax write-offs.

Again, the onus is on the user to calculate these losses, which can prove cumbersome, since they would have to do it for every single crypto card transaction.

Experts told CNBC that ultimately they're skeptical as to whether a crypto card is worth the accounting acrobatics required. But the data appears to show that for now, at least, users are piling in to these cards.

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You can be taxed for buying a cup of coffee with bitcoin using a crypto credit card, but there are ways around it - CNBC