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You only owe taxes on gains, so 1 is irrelevant unless you never, ever will sell in which case price drops are irrelevant to begin with as well. 2. It’s not ab

You only owe taxes on gains, so 1 is irrelevant unless you never, ever will sell in which case price drops are irrelevant to begin with as well. 2. It’s not about prediction. Its about taking gains.

CaptainNegative 4y ago
Taxes are on gains, but they are far from irrelevant when comparing buy-and-hold strategies with those involving many transactions. An x% tax effectively reduces net profits by x% every time you sell, meaning that it eats into the compounding rate (at the buy-sell interval), which is fundamentally different from eating into your "simple" profit as it effectively would for buy-and-hold. To give some concrete numbers, imagine you want to invest $1000 for 10 years with 10% APY with gains taxed at 20%. Buy-and-hold nets you $1000 * 1.1^10 = $2594 pre-tax, and $2594 - (2594-1000)*.2 = $2275 post-tax. Cashing out and immediately buying back in every year nets you the smaller $1000 * 1.08^10 = $2159 post-tax.
- endisneigh 4y ago
  What you’re saying isn’t relevant because the HODL philosophy is that you believe bitcoin will moon, therefore you can buy all dips and cash out inevitably when it moons.
  - junofan 4y ago
    No. It means don’t sell in a bear market [1]. From the originator, GameKyuubi: > You only sell in a bear market if you are a good day trader or an illusioned noob. The people inbetween hold. In a zero-sum game such as this, traders can only take your money if you sell. [1]: https://www.investopedia.com/terms/h/hodl.asp https://www.investopedia.com/terms/h/hodl.asp
    - endisneigh 4y ago
      I’m familiar, which goes back to to my original point and post.
nemo44x 4y ago
It’s not irrelevant at all. You use your capitalization for margin loans and credit. Naturally you’re hedging so it’s not super important but I wouldn’t call it irrelevant in many cases. And gains are great! But tax consequences should be considered if you plan on reentering the position with the same capital.

CaptainNegative 4y ago

Taxes are on gains, but they are far from irrelevant when comparing buy-and-hold strategies with those involving many transactions. An x% tax effectively reduces net profits by x% every time you sell, meaning that it eats into the compounding rate (at the buy-sell interval), which is fundamentally different from eating into your "simple" profit as it effectively would for buy-and-hold. To give some concrete numbers, imagine you want to invest $1000 for 10 years with 10% APY with gains taxed at 20%. Buy-and-hold nets you $1000 * 1.1^10 = $2594 pre-tax, and $2594 - (2594-1000)*.2 = $2275 post-tax. Cashing out and immediately buying back in every year nets you the smaller $1000 * 1.08^10 = $2159 post-tax.

endisneigh 4y ago
What you’re saying isn’t relevant because the HODL philosophy is that you believe bitcoin will moon, therefore you can buy all dips and cash out inevitably when it moons.
- junofan 4y ago
  No. It means don’t sell in a bear market [1]. From the originator, GameKyuubi: > You only sell in a bear market if you are a good day trader or an illusioned noob. The people inbetween hold. In a zero-sum game such as this, traders can only take your money if you sell. [1]: https://www.investopedia.com/terms/h/hodl.asp https://www.investopedia.com/terms/h/hodl.asp
  - endisneigh 4y ago
    I’m familiar, which goes back to to my original point and post.

nemo44x 4y ago

It’s not irrelevant at all. You use your capitalization for margin loans and credit. Naturally you’re hedging so it’s not super important but I wouldn’t call it irrelevant in many cases. And gains are great! But tax consequences should be considered if you plan on reentering the position with the same capital.