Cost basis is the purchase price used to measure gain or loss. Bitcoin does not carry a label that says what you paid when it leaves an exchange. The basis lives in records, not in the coin.
Basis gets lost when coins move. An exchange knows what you paid only while the lot sits there. After a withdrawal, the next platform may know the deposit date and amount, but not the original cost. If you later sell, the second platform cannot invent a correct basis.
Large traders lose basis in bulk: old wallets, closed accounts, forgotten CSV files, and coins that passed through three venues before a sale. The IRS still expects a supportable number.
Professional teams rebuild basis by lining up the original acquisition, the transfers, and the eventual disposal. They use exchange history, wallet records, and on-chain data. Where records are incomplete, they document the reconstruction instead of guessing in silence.
CoinLedger’s experts treat missing basis as a core part of the job, not an error message to ignore. For traders with large purchases spread over years, that rebuild is the tax file.
Learn more about CoinLedger’s done-for-you cryptocurrency tax tools:
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