LIFO, or Last In, First Out, is a cost-basis method that assumes the most recently acquired assets are sold or disposed of first.
In crypto tracking, this means your latest purchase or transfer is considered the first to be sold — which can reduce taxable gains in a rising market if your recent buys were at higher prices.
Why LIFO Matters in Crypto
LIFO is often used strategically for tax optimization. When crypto prices rise, your newest coins tend to have the highest cost basis, which lowers your taxable profit when you sell.
Not every tax jurisdiction allows LIFO, but where permitted, it can help minimize short-term gains and smooth out your realized profits.
Example
You bought:
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1 BTC @ $20,000
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1 BTC @ $30,000
Then sold 1 BTC @ $40,000
Under LIFO:
The $30,000 coin (your last in) is considered sold first, giving you a $10,000 gain.