Anyone else ashamed to admit... crypto gains?

[PDXTabs]

A year from now, I suspect you'll hear about as much "bitcoin" talk as you heard ".com" talk in 2001 The deafening silence a year after the "this time it's different!" bubble pops and all the paper millionaires are back driving cabs again (well, maybe driving Uber, that's the one part of this mania that really is different than the last one).

I think a lot about this. I have mined 2.8 ETH, and expect my hardware to last at least another 30 months. I'm also happy to hold onto the ETH for the next 12 years (selling it now would trigger short term capital gains).

So, is cryptocurrency going to be like the .coms where there was a bubble, and a crash, and now e-commerce is commonplace and amazon.com is eating the world? And if so, how do I diversify my cryptocurrency holdings so that in 12 years (the earliest that I can retire) I have a nice portfolio?

Also, I max out my 401k in equities, so this is all a fun side game really.

EDIT - In the worst case, I can always sell my ETH at a loss to offset other gains (or even $3K/year of ordinary income).

[maizefolk]

EDIT - In the worst case, I can always sell my ETH at a loss to offset other gains (or even $3K/year of ordinary income).

Can you claim a greater than $0 cost basis for currency that was mined rather than purchased directly?

[PDXTabs]

Can you claim a greater than $0 cost basis for currency that was mined rather than purchased directly?

Yes, because you get to pay ordinary income tax on all mining shares acquired based on their value the day you acquired them. Otherwise, you are committing tax fraud (which I won't do). This is exactly the same as if your employer gave you a share of stock. Also, because you pay ordinary self employed income tax on mining, AFAIK, you get to put 25% of your mining profits into a SEP IRA. Also also, because you are paying taxes you get to write off all mining related expenses (hardware, electricity, internet).

https://bitcoin.tax/blog/filing-your-bitcoin-taxes-income-spending-mining/

[maizefolk]

Good to know, thanks!

[Dago]

Well, I am actually a bit ashamed and disturbed by the gains I made.

I invested 1000$ in 2011 and 4000$ in 2013, all in bitcoins. I did not sell and went through the bubbles and crises. I subsequently invested in a few other cryptos, in particular I crowdfunded ethereum. I have cashed out 350k this year and still have 1.5M on paper. It always was a funny dream, saying "what if Bitcoin becomes worth a lot?" ; but never truly believing it.

[sherr]

Well, I am actually a bit ashamed and disturbed by the gains I made.

I invested 1000$ in 2011 and 4000$ in 2013, all in bitcoins. I did not sell and went through the bubbles and crises. I subsequently invested in a few other cryptos, in particular I crowdfunded ethereum. I have cashed out 350k this year and still have 1.5M on paper. It always was a funny dream, saying "what if Bitcoin becomes worth a lot?" ; but never truly believing it.

If that's true you should get your 1.5M out too. That's more than enough to live comfortably on for the rest of your life. What are you waiting for, more? If I were you I'd get out while I could.

[Dago]

Well, I am actually a bit ashamed and disturbed by the gains I made.

I invested 1000$ in 2011 and 4000$ in 2013, all in bitcoins. I did not sell and went through the bubbles and crises. I subsequently invested in a few other cryptos, in particular I crowdfunded ethereum. I have cashed out 350k this year and still have 1.5M on paper. It always was a funny dream, saying "what if Bitcoin becomes worth a lot?" ; but never truly believing it.

If that's true you should get your 1.5M out too. That's more than enough to live comfortably on for the rest of your life. What are you waiting for, more? If I were you I'd get out while I could.

In most cases your advises are sound and should be followed. Here is why I do not sell  :

• I believe in crypto-currencies. I did not buy in only, or even mostly, to become rich ; I did because I believe in their potential to change positively the world.
• I live, and have always lived, in a place where 1.5M is not enough to live for the rest of my life

[Syonyk]

In most cases your advises are sound and should be followed. Here is why I do not sell  :

• I believe in crypto-currencies. I did not buy in only, or even mostly, to become rich ; I did because I believe in their potential to change positively the world.
• I live, and have always lived, in a place where 1.5M is not enough to live for the rest of my life

Ok.  So pull $500k, or $1M out.

If bitcoin goes to the moon, your remaining holdings will still be worth an awful lot of money.

If bitcoin goes to the floor, you'll have extracted some rather significant value out of your investment.

[ChpBstrd]

Well, I am actually a bit ashamed and disturbed by the gains I made.

I invested 1000$ in 2011 and 4000$ in 2013, all in bitcoins. I did not sell and went through the bubbles and crises. I subsequently invested in a few other cryptos, in particular I crowdfunded ethereum. I have cashed out 350k this year and still have 1.5M on paper. It always was a funny dream, saying "what if Bitcoin becomes worth a lot?" ; but never truly believing it.

Comgratulations!

So when will you get out? I, personally, would have a hard time living with myself if I won the bubble lottery and then held on too long and ended up having to go back to the rat race. I also have memories of dot-com millionaires who became thousanaires within a matter of months. I'm guessing the same constitution and patience that have allowed you to hang on this long might carry you over the edge. What next, and how to decide?

[GGNoob]

Is anyone here arguing that they would rebalance into bitcoin or other cyptocurrencies when the price was falling? (If so I'd be curious to hear your thoughts.)

So that was actually my goal originally. Hold about 5% of my portfolio in crypto (I actually let it work it's way up to 10% at one point) and then rebalance as needed. My investing strategy is to rebalance with my 457 contributions monthly and rebalance at a 5% drift. So I cashed out Bitcoin as the price rose and I hit that 5% drift, allowing me to toss that money into my stock ETFs instead. But when the price of Bitcoin went up to its recent highs, it scared me that if it went down and never came back up, I'd be tossing money in to rebalance and could lose a lot more than that 5% of my allocation as I keep tossing more money in.

[Cassie]

We just cashed out 60k in bitcoin and hung onto a small amount. A bird in the hand.

[ketchup]

Well, I am actually a bit ashamed and disturbed by the gains I made.

I invested 1000$ in 2011 and 4000$ in 2013, all in bitcoins. I did not sell and went through the bubbles and crises. I subsequently invested in a few other cryptos, in particular I crowdfunded ethereum. I have cashed out 350k this year and still have 1.5M on paper. It always was a funny dream, saying "what if Bitcoin becomes worth a lot?" ; but never truly believing it.

Comgratulations!

So when will you get out? I, personally, would have a hard time living with myself if I won the bubble lottery and then held on too long and ended up having to go back to the rat race. I also have memories of dot-com millionaires who became thousanaires within a matter of months. I'm guessing the same constitution and patience that have allowed you to hang on this long might carry you over the edge. What next, and how to decide?

Yeah, holy shit.  I'd probably cash out a cool $1M.  Even if you don't think $1.5M isn't "enough" where you live, it's still $1.5M closer to "enough."

[Dago]

Thank you all for your nice words and good advises.

I have cashed out 350k and would still be happy if the market collapsed. Of course one could regret not having cashed out 1M but then one could also regret cashing out if Bitcoin continues its raise. I have to digest what you said and might reconsider, maybe cashing out a bit more. The Christmas break will help with taking distance and relaxing and taking wise decisions (hopefully !).

Thanks again!

[steveo]

Well, I am actually a bit ashamed and disturbed by the gains I made.

I invested 1000$ in 2011 and 4000$ in 2013, all in bitcoins. I did not sell and went through the bubbles and crises. I subsequently invested in a few other cryptos, in particular I crowdfunded ethereum. I have cashed out 350k this year and still have 1.5M on paper. It always was a funny dream, saying "what if Bitcoin becomes worth a lot?" ; but never truly believing it.

Well done for making that much money. I would pull out all the paper profits. I would look on your money not as the potential to become a multi-millionaire but the ability to fund your life from this day forward. Money to me isn't something to keep score with but it is something to ensure that you can live a good life. Money is just a tool.

[sherr]

• I believe in crypto-currencies. I did not buy in only, or even mostly, to become rich ; I did because I believe in their potential to change positively the world.

Not to mention that I don't think this reason makes any sense. Cryptocurrencies may positively change the world, but you in particular holding a bunch of them won't make any difference at all.

[talltexan]

Thank you all for your nice words and good advises.

I have cashed out 350k and would still be happy if the market collapsed. Of course one could regret not having cashed out 1M but then one could also regret cashing out if Bitcoin continues its raise. I have to digest what you said and might reconsider, maybe cashing out a bit more. The Christmas break will help with taking distance and relaxing and taking wise decisions (hopefully !).

Thanks again!

I--frankly--wonder what controls the financial system starts putting on you when you're moving around amounts of money like this. Did the $350,000 go into a checking account? Did your bank start asking any questions about where this money came from? What tax implications (Federal and State) do you think you will have to manage?

Lots of people seem ready to give you advice, Dago, but you already come across as very balanced in moving forward with this situation.

[CanuckExpat]

Thank you all for your nice words and good advises.

I have cashed out 350k and would still be happy if the market collapsed. Of course one could regret not having cashed out 1M but then one could also regret cashing out if Bitcoin continues its raise. I have to digest what you said and might reconsider, maybe cashing out a bit more. The Christmas break will help with taking distance and relaxing and taking wise decisions (hopefully !).

Thanks again!

One question you can ask yourself: if you held no crypto currency, would you buy $1 million worth of bitcoin at the current prices? If the answer is yes, then you should hold. If the answer is no, you should consider selling your holdings.

(take into account transaction costs and taxes)

[talltexan]

Could it be that Dago asked zhimself: with what I know today, would I buy $1,400,000 worth of bitcoin today?

No.

Alright, let's move 1/4 of that into other assets.

[Scandium]

I bought $4 of etherium and forgot about it. It's now worth .... $11! Good return percentage wise, but I wasn't stupid/smart enough to put any serious money into it

[phil22]

Thank you all for your nice words and good advises.

I have cashed out 350k and would still be happy if the market collapsed. Of course one could regret not having cashed out 1M but then one could also regret cashing out if Bitcoin continues its raise. I have to digest what you said and might reconsider, maybe cashing out a bit more. The Christmas break will help with taking distance and relaxing and taking wise decisions (hopefully !).

Thanks again!

One question you can ask yourself: if you held no crypto currency, would you buy $1 million worth of bitcoin at the current prices? If the answer is yes, then you should hold. If the answer is no, you should consider selling your holdings.

(take into account transaction costs and taxes)

there is also opportunity cost in selling your cryptos.  this is a new asset class and who knows what will happen over the next 10 or 20 years.

if you're uneasy about your gains on paper you could sell some to make a nice profit after taxes, and keep the rest.  on the other hand, if you don't need the money, and most of us on this forum aren't exactly strapped for cash, just hold.

[CanuckExpat]

Thank you all for your nice words and good advises.

I have cashed out 350k and would still be happy if the market collapsed. Of course one could regret not having cashed out 1M but then one could also regret cashing out if Bitcoin continues its raise. I have to digest what you said and might reconsider, maybe cashing out a bit more. The Christmas break will help with taking distance and relaxing and taking wise decisions (hopefully !).

Thanks again!

One question you can ask yourself: if you held no crypto currency, would you buy $1 million worth of bitcoin at the current prices? If the answer is yes, then you should hold. If the answer is no, you should consider selling your holdings.

(take into account transaction costs and taxes)

there is also opportunity cost in selling your cryptos.  this is a new asset class and who knows what will happen over the next 10 or 20 years.

That opportunity cost also exists for someone who holds cash, or stocks, or bonds. There is nothing special about crypto that you already hold (aside from taxes and transaction cost).

There is a mental aspect: if you want regret miniization, that's fine, but admit to yourself it's psychological

[phil22]

One question you can ask yourself: if you held no crypto currency, would you buy $1 million worth of bitcoin at the current prices? If the answer is yes, then you should hold. If the answer is no, you should consider selling your holdings.

there is also opportunity cost in selling your cryptos.  this is a new asset class and who knows what will happen over the next 10 or 20 years.

That opportunity cost also exists for someone who holds cash, or stocks, or bonds. There is nothing special about crypto that you already hold (aside from taxes and transaction cost).

There is a mental aspect: if you want regret miniization, that's fine, but admit to yourself it's psychological

you're not considering diversification.  cash, stocks, bonds, real estate, etc., are not new asset classes.  and people on this forum are probably amassing tons of those already.

[Finallyunderstand]

OP here. 

I cashed out remaining $30k I still had in there this morning.  The downward slide today scared me.  I can't imagine what the poster above with $1.5million is thinking today.  Strong chance it's under $1million now. 

I may get back in because it's fun but for now I'm happy with my profits.  If I had sold 2 days ago that $30k was $40k.  Oh well.  Up a lot from original investment but still "lost" from the top.  Can't be perfect. 

The funny thing is I made double what I made in the market this year with 5% of the investment amount.  Crazy.