Chapter 13. Where bitcoin fits in your money
Every number in the book has a source. To keep the book short, the notes live here instead of in print. Each source is listed with the section of the book it supports and the words it backs up, in the order they appear in the chapter. Web addresses are links; a page may have moved since the date shown.
The chapter page · Chapter 12 sources · All chapters · Chapter 14 sources
Where bitcoin sits: “fallen by more than three-quarters from a high on four occasions since 2011”
Peak-to-trough declines and time to a new high, computed from Coin Metrics Community Network Data, daily bitcoin reference price (PriceUSD), coinmetrics.io, retrieved September 2026: June 2011 high to November 2011 low, 93%, new high February 2013; December 2013 to January 2015, 84%, new high February 2017; December 2017 to December 2018, 84%, new high November 2020; November 2021 to November 2022, 77%, new high March 2024.
Where bitcoin sits: “BlackRock suggested up to 2% in December 2024, Morgan Stanley up to 4%”, “He used Nakamoto Portfolio, a site that takes a mix of stocks and bonds”
Nakamoto Portfolio, a Swan Research project, nakamotoportfolio.com, retrieved September 2026. Allocation ranges: BlackRock Investment Institute, “Sizing Bitcoin in Portfolios,” December 12, 2024, blackrock.com; Morgan Stanley Global Investment Committee, October 2025, as reported by CNBC, October 2025; Bank of America, Chief Investment Office guidance effective January 5, 2026, as reported by The Block, December 2, 2025, theblock.co; all retrieved October 2026.
Two ways to hold bitcoin in an account: “Since January 2024, when the Securities and Exchange Commission approved them”
U.S. Securities and Exchange Commission, “Statement on the Approval of Spot Bitcoin Exchange-Traded Products,” January 10, 2024.
Two ways to hold bitcoin in an account: “Funds charge an annual fee, a quarter of 1% for the two named above”
iShares Bitcoin Trust ETF (IBIT), sponsor fee 0.25%, ishares.com, retrieved September 2026; Fidelity Wise Origin Bitcoin Fund (FBTC), expense ratio 0.25%, fund fact sheet, Fidelity, June 2026. The spot bitcoin ETFs are organized as grantor trusts rather than as funds under the Investment Company Act, which is why a share is a claim on the trust’s bitcoin and why sales are reported on Form 1099-B.
Two ways to hold bitcoin in an account: “after age 59 and a half, and once the account is five years old”
IRS, Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs), for use in preparing 2025 returns, “What Are Qualified Distributions?”, irs.gov, retrieved September 2026.
Two ways to hold bitcoin in an account: “as of September 2026, both charge 1% per trade, one adds a monthly fee”
iTrustCapital, pricing page, 1% per crypto trade and no monthly or annual fee on standard accounts, itrustcapital.com, retrieved September 2026; Swan Bitcoin, IRA fee schedule, 1% per trade plus a monthly fee of 0.02% of assets with a $20 minimum, swanbitcoin.com, retrieved September 2026.
Two ways to hold bitcoin in an account: “Federal law requires that IRA assets be held by a trustee or custodian”
Internal Revenue Code section 408(a)(2), and IRS, Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs), for use in preparing 2025 returns: “The trustee or custodian must be a bank, a federally insured credit union, a savings and loan association, or an entity approved by the IRS to act as trustee or custodian,” irs.gov, retrieved September 2026; McNulty v. Commissioner, 157 T.C. 79 (2021), holding that an IRA owner who took personal possession of the account’s assets took a taxable distribution.
The one tax rule: “since 2014 the IRS has treated bitcoin as property”
IRS, Notice 2014-21, 2014.
The one tax rule: “Getting paid in bitcoin, or earning it by mining, is ordinary income”
IRS, “Digital Assets,” irs.gov/digitalassets, and Frequently Asked Questions on Virtual Currency Transactions, 2025.
The one tax rule: “the giver may have a form to file above the yearly exclusion”
IRS, Revenue Procedure 2024-40, section 2503 annual exclusion of $19,000 for calendar year 2025; IRS, Revenue Procedure 2025-32, October 9, 2025, $19,000 for calendar year 2026, irs.gov, retrieved September 2026.
The one tax rule: “A gift worth more than $5,000 needs a qualified appraisal. Talk to…”
IRS Publication 526, Charitable Contributions, and Form 8283 instructions (a qualified appraisal for noncash gifts over $5,000).
The one tax rule: “the zero-rate covered single filers with taxable income up to $48,350”
IRS, Topic No. 409, Capital Gains and Losses; IRS, Revenue Procedure 2024-40, maximum zero rate amount for unmarried individuals of $48,350 for 2025; IRS, Revenue Procedure 2025-32, $49,450 for 2026, irs.gov, retrieved September 2026.
The one tax rule: “The bill a House committee approved in September 2026 would apply the rule”
Internal Revenue Code section 1091 (wash sales). Proposals to extend it to digital assets include Senator Cynthia Lummis’s digital asset tax bill, press release, July 3, 2025, and H.R. 10357, the Digital Asset Tax Certainty Act, described in Joint Committee on Taxation, JCX-47-26, September 14, 2026, and approved by the House Ways and Means Committee on September 16, 2026. As of September 2026, none had been enacted. Committee approval, 38 to 5, September 16, 2026: EY Tax News, “Ways and Means approves digital assets tax bill,” September 2026 (retrieved October 2026).
The one tax rule: “A loss, short or long, can offset gains and up to $3,000…”
IRS Topic No. 409, “Capital gains and losses,” irs.gov ($3,000 a year, $1,500 if married filing separately; the rest carries forward).
The one tax rule: “Celsius and BlockFi, went bankrupt in 2022 with customer bitcoin inside them”
Celsius Network, Chapter 11 petition, July 2022; BlockFi, Chapter 11 petition, November 2022, U.S. Bankruptcy Court filings.
The one tax rule: “the federal housing regulator told Fannie Mae and Freddie Mac to draft a proposal”
Federal Housing Finance Agency, Director William Pulte, directive to Fannie Mae and Freddie Mac on considering cryptocurrency as a reserve asset in single-family mortgage risk assessments, June 25, 2025, fhfa.gov, retrieved September 2026.
The one tax rule: “whether you received, sold, exchanged, or otherwise disposed of a digital asset”
IRS, Form 1040 instructions, digital asset question, tax year 2025.
The one tax rule: “Beginning with the 2025 tax year, brokers report your sales on Form 1099-DA”
IRS, Treasury Decision 10000, “Gross Proceeds and Basis Reporting by Brokers and Determination of Amount Realized and Basis for Digital Asset Transactions,” June 2024: gross proceeds reporting for transactions on or after January 1, 2025, basis reporting for covered digital assets acquired and sold on or after January 1, 2026; IRS, “Final regulations and related IRS guidance for reporting by brokers on sales and exchanges of digital assets,” and Instructions for Form 1099-DA (2026), irs.gov, retrieved September 2026.
The one tax rule: “dozens of countries have agreed to a shared standard under which their exchanges report”
OECD Crypto-Asset Reporting Framework: data collection from January 1, 2026 in early-adopting jurisdictions, first exchanges in 2027; U.S. participation under review: Withum, “Understanding CARF: The New Global Standard for Crypto Taxation,” February 3, 2026, updated April 9, 2026; Decrypt, “White House Reviews Proposed IRS Rule to Tax Americans’ Foreign Crypto Accounts,” November 2025 (retrieved October 2026).
The one tax rule: “your cost basis is tracked separately for each wallet and each exchange account”
Treas. Reg. section 1.1012-1(j) (identifying which digital asset units are sold, effective for sales on or after January 1, 2025); Rev. Proc. 2024-28 (basis allocated wallet by wallet and account by account); IRS Notice 2025-7 and Notice 2026-20 (standing identification kept in the taxpayer’s own records allowed through December 31, 2026), as reported by 24/7 Wall St., October 1, 2026 (retrieved October 2026).
The one tax rule: “In September 2026 the Senate failed to advance the CLARITY Act, the…”
DLA Piper, “Senate fails to advance the CLARITY Act: top points,” September 2026, dlapiper.com; Troutman Pepper Locke, “In the Wake of CLARITY Act’s Failure, Agencies Move Forward,” 2026.
The one tax rule: “A stablecoin law, the GENIUS Act, passed in July 2025. In September…”
Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, signed into law July 18, 2025.
Getting in after you are gone: “a death certificate and court papers, and Coinbase publishes its steps”
Coinbase Help Center, “Claim a decedent’s Coinbase account,” help.coinbase.com, retrieved September 2026.
Getting in after you are gone: “generally takes a new cost basis equal to its value on the day”, “since 2026 the first $15 million per person passes free of it”
Internal Revenue Code section 1014, basis of property acquired from a decedent; IRS, Publication 551, Basis of Assets, revised December 2025, “Inherited Property,” irs.gov, retrieved September 2026. Estate tax: IRS, Rev. Proc. 2025-32 (2026 basic exclusion amount of $15,000,000); One Big Beautiful Bill Act, Pub. L. 119-21 (2025), making the higher exclusion permanent with inflation indexing; state estate and inheritance taxes: Onramp, “Bitcoin Estate Tax Rules in 2026, in Five Numbers,” August 25, 2026 (retrieved October 2026).
Bitcoin that passes by rule: “Nunchuk builds this into its product so the owner never touches the technical details”
Nunchuk, “Inheritance Planning,” nunchuk.io/inheritance, and “Nunchuk 2.0: Autonomous Inheritance,” November 12, 2025, nunchuk.io; Casa, “Casa Inheritance,” casa.io/inheritance, retrieved September 2026.
The next time the price falls: “Loss aversion, from Chapter 2, is the reason a fall hurts more”
Kahneman and Tversky, “Prospect Theory: An Analysis of Decision under Risk,” Econometrica, 1979.
The next time the price falls: “From its high in December 2017, bitcoin fell about 84% over the following year”
Drawdowns computed from Coin Metrics Community Network Data, daily bitcoin reference price (PriceUSD), coinmetrics.io, retrieved September 2026: December 2017 high to December 2018 low, 84%; November 2021 high to November 2022 low, 77%.
The next time the price falls: “research since the 1990s finds people follow far more reliably than a general resolve”
Gollwitzer, “Implementation Intentions: Strong Effects of Simple Plans,” American Psychologist, 1999.
Worth repeating: “The number of possible addresses is so large, roughly a 49-digit number”
Andreas M. Antonopoulos and David A. Harding, Mastering Bitcoin, 3rd ed., O’Reilly, 2023, chapter 4, on the 20-byte (160-bit) hash that standard pay-to-public-key-hash and native segwit addresses commit to; 2 to the 160th power is about 1.46 times 10 to the 48th, a 49-digit number.
Getting in after you are gone · Worth repeating
Jeff John Roberts and Nicolas Rapp, “Exclusive: Nearly 4 Million Bitcoins Lost Forever, New Study Says,” Fortune, November 25, 2017, reporting Chainalysis estimates of 2.78 to 3.79 million; River Intelligence, “How Much Bitcoin Is Gone Forever?”, September 6, 2023 (3 to 4 million), river.com; Dhruv Bansal, “The Geology of Lost Coins,” Unchained, updated April 17, 2026 (3.0 to 3.8 million), unchained.com, retrieved September 2026.
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