If you buy some stock or crypto and it appreciates enough for you to take profits, you should take more than what you originally put in. I've seen many people take only the amount that they put in and get screwed over from a tax perspective. The logic makes sense to the average person.
You buy some crypto for $100. It goes up 10x and you sell just enough to get your $100 back. Now everything that you have left in the crypto should be pure upside, because you got your original $100 out. Therefore even if it goes to zero you lose nothing right? WRONG. Here's the math...
From the IRS perspective, you just made $90 dollars so they will want to tax that. At 35%, you owe them $31.50.
How did they come up with $90? Well in this hypothetical situation, your $100 investment became $1,000 and you are selling 1/10th of the $1000 to get back your $100. But they will compare that to 1/10th of your original investment, in other words, $10. Therefore you've made $90 on that original $10 investment and you will be taxed on it.
Now, If the remainder of your crypto goes to 0, then you actually just lost $31.50.
If you end up selling the remainder of the shares when they're deemed worthless, then you can offset some losses, but I find most people just keep them in their wallet for the off chance they come back.