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November 14, 2015, 07:39:04 AM |
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Why buy-and-hold the best coin is better than trading:
Buy and hold bitcoins, and you can ride out a two or more year bear market by buying more (if you believe in it, as I do). So if the market goes down, you get more bitcoins. Also, if the market goes up, and you hold, you owe taxes only on the (hopefully) small percentage you actually spend. The ones you continue to hold cause no tax headaches.
Trade bitcoins against dollars, and pay taxes on your sell at what you hope is the top. Good luck with that possibly massive loss of trading gains to the tax man. Good luck hoping bitcoins go back down again so you can "buy back even more."
Trade bitcoins against Litecoins or some other copy/alt, and you should probably be a smart insider. If you are, I'm sure you're laughing at this post. If you are like most of us, and not an insider, plan on guessing wrong a lot, and owing massive tax bills on any gains. More likely, plan on losses you can't claim all in one year (capped at 3000 USD in US).
Buy Litecoins and jump for joy if the price spikes massively better than bitcoin. Then either cry as they go down inevitably (to trade like "silver to Bitcoin's gold"), or dump them and then you are a trader paying taxes on all your coins. Headache at best, but maybe you're richer. That's the hook that gets you to buy (SOON, before the next MOON). But wait -- what if there is no MOON for Litecoin next time? Here's what I've learned trading Litecoin in 2014 and 2015. Trading NEVER goes the "obvious" way it "should". Well, hardly ever.
Bitcoins are adding value to the world, and I believe are worth buying and holding and buying more even as the price goes down, because in the long run, they will prove a good store of value. And maybe go up.
But trading them in large (whatever "large" means to you) quantities? I've tried it for two years, with most of my small amount of savings, trying to sell in a bear market, and invest in litecoins, and DUMP litecoins, and guess the bottoms. Best thing I can say about it is I learned to quit that before any massive price gains come. If they do come, the tax consequences of trading all of your coins would be a massive loss to taxes and could easily turn all your gains to losses.
I'm glad I learned a lot about trading, but it cost me. With the same investment, and even though I paid no taxes (due to I don't have massive amounts of coins and they didn't go up in value), I would have been better off to just buy with the same fiat, as I had it, and hold.
I would have more bitcoins today had I never sold in a bear market or bought litecoins. Guessing price movements is tough! I didn't guess better than chance.
Skip the next litecoin MOOON pump? Yes please. I don't believe I can get that right, even if one happens.
Buy and hold more bitcoins? Yes please. And if we have another price spike, and I become sure they are going to go down again... I will know better than to sell.
That's the benefit of two years of experience as a noob "trader".
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