02-24-2021, 07:12 AM
Caution to those trading crypto at the height of a bull-market..... A WORD OF WARNIN
<!-- SC_OFF --><div class="md"><p>This is especially for newcomers, but I feel that given the recent dip, it's very important that anyone who dabbles in trading crypto may screw themselves over if they're not careful. <strong>Let me explain...</strong></p> <p>I'll preface this post by saying that you should <strong>ALWAYS</strong> be including your crypto trading information come tax season, though ultimately it's your neck that's on the line if you choose not to. </p> <p>​</p> <p>So first thing's first, how can I get screwed over by trading in a bull market?</p> <p>In places like the US and Canada, you're supposed to be disclosing any and all trade information when you sell X crypto, to buy X crypto. In Canada anyways, you're taxed on 50% of your capital gains. In the US, you're taxed anywhere from 10% to 40% of your capital gains if hodling for under a year... <strong>Why is this important?</strong></p> <p>Let me give you a scenario...</p> <p>​</p> <p>Say that you were lucky enough to buy 2 BTC at $10,000 each around October of 2020, and held onto it into 2021. If hypothetically in July we see BTC rally and surpass $100,000 and you decide that you want to trade your 2 BTC for ETH. Given US tax law, you now owe 32% of the capital gains you made on that trade. 32% of $180,000 would be about <strong>$57,600 owed</strong> after subtracting your initial $20,000 capital investment. <strong>No big deal, right?</strong> </p> <p>Now say (heaven forbid) that BTC and ETH crash off the face of the earth back down to the $10,000 and $400 range respectively by December..... <strong>Well tough shit if your portfolio is nearly diminished, you still owe $57,600 on that trade from 2021.</strong></p> <p>​</p> <p>This <strong>HAS</strong> happened, guys... <a href="/r/CC">/r/CC</a> was flooded with posts similar to these back in 2018-2019 because people went in assuming that the bull market would never end, and ended up screwing themselves over by being careless...</p> <p>If you're serious about putting a large sum of money into crypto, use your head. Don't go trading willy-nilly when the market is up. Believe me, it's not worth the future headache...</p> <p>​</p> <p><strong>TLDR:</strong> <strong><em>You hypothetically buy 2 BTC at $10,000 each in October of 2020. Price of BTC goes to $100,000 in July and you decide to trade it all for ETH. The market tanks, and BTC/ETH is back down to $10,000/$400 respectively by December. In the US you now owe $57,600 on the capital gains made on that trade in July regardless of how fucked your portfolio is.... Don't screw yourself over by trading carelessly when the market is up....</em></strong></p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/clodhopper88"> /u/clodhopper88 </a> <br/> <span><a href="https://www.reddit.com/r/CryptoCurrency/comments/lqlgjd/caution_to_those_trading_crypto_at_the_height_of/">[link]</a></span> <span><a href="https://www.reddit.com/r/CryptoCurrency/comments/lqlgjd/caution_to_those_trading_crypto_at_the_height_of/">[comments]</a></span>Kind Regards R
<!-- SC_OFF --><div class="md"><p>This is especially for newcomers, but I feel that given the recent dip, it's very important that anyone who dabbles in trading crypto may screw themselves over if they're not careful. <strong>Let me explain...</strong></p> <p>I'll preface this post by saying that you should <strong>ALWAYS</strong> be including your crypto trading information come tax season, though ultimately it's your neck that's on the line if you choose not to. </p> <p>​</p> <p>So first thing's first, how can I get screwed over by trading in a bull market?</p> <p>In places like the US and Canada, you're supposed to be disclosing any and all trade information when you sell X crypto, to buy X crypto. In Canada anyways, you're taxed on 50% of your capital gains. In the US, you're taxed anywhere from 10% to 40% of your capital gains if hodling for under a year... <strong>Why is this important?</strong></p> <p>Let me give you a scenario...</p> <p>​</p> <p>Say that you were lucky enough to buy 2 BTC at $10,000 each around October of 2020, and held onto it into 2021. If hypothetically in July we see BTC rally and surpass $100,000 and you decide that you want to trade your 2 BTC for ETH. Given US tax law, you now owe 32% of the capital gains you made on that trade. 32% of $180,000 would be about <strong>$57,600 owed</strong> after subtracting your initial $20,000 capital investment. <strong>No big deal, right?</strong> </p> <p>Now say (heaven forbid) that BTC and ETH crash off the face of the earth back down to the $10,000 and $400 range respectively by December..... <strong>Well tough shit if your portfolio is nearly diminished, you still owe $57,600 on that trade from 2021.</strong></p> <p>​</p> <p>This <strong>HAS</strong> happened, guys... <a href="/r/CC">/r/CC</a> was flooded with posts similar to these back in 2018-2019 because people went in assuming that the bull market would never end, and ended up screwing themselves over by being careless...</p> <p>If you're serious about putting a large sum of money into crypto, use your head. Don't go trading willy-nilly when the market is up. Believe me, it's not worth the future headache...</p> <p>​</p> <p><strong>TLDR:</strong> <strong><em>You hypothetically buy 2 BTC at $10,000 each in October of 2020. Price of BTC goes to $100,000 in July and you decide to trade it all for ETH. The market tanks, and BTC/ETH is back down to $10,000/$400 respectively by December. In the US you now owe $57,600 on the capital gains made on that trade in July regardless of how fucked your portfolio is.... Don't screw yourself over by trading carelessly when the market is up....</em></strong></p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/clodhopper88"> /u/clodhopper88 </a> <br/> <span><a href="https://www.reddit.com/r/CryptoCurrency/comments/lqlgjd/caution_to_those_trading_crypto_at_the_height_of/">[link]</a></span> <span><a href="https://www.reddit.com/r/CryptoCurrency/comments/lqlgjd/caution_to_those_trading_crypto_at_the_height_of/">[comments]</a></span>Kind Regards R