If you sell cryptocurrency shortly before it drops in value, you still owe capital gains tax on the sale price at the time of the transaction, not the lower price it falls to afterward. The CRA taxes you on your actual gain or loss when you dispose of the asset, regardless of what happens to its value in the future. This timing mismatch can feel frustrating, but it's important to understand how it affects your tax bill and whether any planning strategies might help. The moment you sell crypto for Canadian dollars (or exchange it for another cryptocurrency), the CRA considers that a "disposition." Your capital gain is calculated as: Sale Price - Adjusted Cost Basis = Capital Gain (or Loss) If you sold Bitcoin at $65,000 per unit and your cost basis was $30,000, you have a $35,000 capital gain, taxable at the time of sale. If Bitcoin crashes to $40,000 the next day, it doesn't reduce your tax liability for that sale. The loss on the post-sale decline can only be claimed if you buy again and later sell at a lower price. This is one reason many crypto investors struggle with timing decisions.
No. A capital loss is only realized when you actually sell or dispose of the cryptocurrency. Holding a position that has declined in value does not create a tax loss until you sell it. Once you sell at a loss, you can then use that capital loss to offset capital gains from the same year or other years.
Not until you sell it. The unrealized loss does not count for tax purposes. Once you sell or exchange it for less than your cost, you can claim the capital loss. That loss can offset other capital gains you realized in 2026 or be carried back three years or forward indefinitely.
The CRA disallows capital losses if you (or your spouse or controlled entity) repurchase substantially identical cryptocurrency within 30 days before or after the sale. This prevents you from claiming a loss while maintaining the same investment position. Wait at least 30 days before buying the same crypto back to avoid this issue.
Tax should not be your only factor in deciding whether to sell. Focus on whether the investment still fits your goals and risk tolerance. If you sell and pay tax, that's a cost of the transaction. If you don't sell and a crash happens, you avoid the immediate tax bill but you've lost portfolio value. Make the investment decision first, then manage taxes accordingly.
No. Your capital gain is based on the price you sold at, not the price afterward. If you sell at $65,000 and it drops to $40,000 the next day, you still owe tax on the gain at your $65,000 sale price. You cannot claim a loss on the post-sale decline unless you buy it again and sell at a lower price later.