FIFO, LIFO, and HIFO Explained for Crypto Investors

If you buy the same coin at several prices, selling part of that position raises a key question: which purchase lot did you sell? The answer affects cost basis and therefore gain or loss.

FIFO, LIFO, and HIFO are different ways to choose lots. The right method depends on your records, your tax situation, and the rules that apply to you.

FIFO treats the earliest acquired units as the first units sold. It is straightforward and often easy to explain because the oldest lots are consumed first.

In a rising market, FIFO can create higher taxable gains because older lots may have lower cost basis. In a falling market, the effect can be different.

LIFO means last in, first out. It uses the most recently acquired lots first. HIFO means highest in, first out, and prioritizes lots with the highest cost basis.

HIFO can reduce calculated gains in some scenarios, but it depends on specific identification and strong records. This is why transaction-level detail matters.

CryptoTrack Pro supports FIFO, LIFO, and HIFO reports so investors can compare outcomes from the same portfolio records.

The goal is not to replace professional advice. The goal is to make your data organized enough that you and your tax professional can review the numbers with less guesswork.