When the mania has run its course?

BuggedOut

BuggedOut

Well-Known Member
Silver Stacker
When I bought heavily back into crypto back in early April I thought I might have missed the rush a bit, but I formed the opinion that crypto was here to stay and my plan was to keep those funds in crypto and never return them to fiat....ever.....

....but if the building mania in crypto keeps going on a parabolic course like it is, there is going to be a point where the rally becomes unsustainable and a serious correction inevitable. Taking the emotion out of it, as an investor there is a price for everything and there will be a point where it makes sense to cash out.

My question is, how and where do you cash out to avoid the post-mania crash?

Here are the options I have looked at so far :-

* Fiat (AUD) - Pulling the money back to AUD might seem the safest option in a "flight to safety" from a crypto mania bubble, but with Australian tax law as it is I'd then be up for a substantial tax bill from the capital gains.

* Tether (USDT) - Technically another crypto but one that is pegged to the US Dollar. Very liquid and usable on exchanges like Poloniex it has some appeal. However, redemptions to actual US Dollars were under question recently and one of the likely black swans that might pop the crypto bubble could be a failure of Tether and/or other redemption issues initiated by the banking sector.

* Alt Coin(s) - Many full time crypto traders swap in and out of Bitcoin/Alts as trends change, but with Alts rallying alongside Bitcoin in a full blown crypto bull market they are just as likely to crash alongside Bitcoin post-mania. Are there any cryptos that people think traders might flight toward in a crash? Maybe DOGE? Or even Ripple - the "anti-Bitcoin"?

* BitGold - Crypto backed by gold is very tempting for a goldbug like me. I was disappointed to find that the conversion is one-directional only. You can buy bitgold with bitcoin, but you can't convert bitgold back to bitcoin. This makes me suspicious and also I think there is higher counterparty risk here and the tax implications of redeeming to physical gold might also be a bit of a grey area.

* BitShares (USD) - These things are a little complicated and they look derivative-ish to me, but basically what you do is buy Bitshares and then put them down as collateral against a USD currency peg. If the value of the collateral Bitshares value drops too low against the USD then you get a margin call type situation. In post-mania crypto land this could be a risk.

* Spend It - I'd love to buy a property or maybe a car with the proceeds but the places accepting Bitcoin as payment here are still pretty non-existent. I've looked up LivingRoomOfSatoshi.com but they have a payment limit of $1000 and the exchange rate is pretty poor compared to BTCMarkets.

Unfortunately the tax situation in Australia is a bit grey and the tax agents I've spoken to where I live are pretty much clueless about this stuff. So I'm wondering what clued up SS members are thinking when it's time to cash out? What is your "flight to safety" plan and does it minimise your tax obligation?

DISCLAIMER - I don't think we have yet seen a full blown mania yet, but I want to be 2 steps ahead of it and have a plan in place for when I think it's run its course.
 
In theory, if you had an overseas bank account or a foreign wife that has one, you could sell btc on a local exchange and have the money deposited into the foreign account. Then on your next holiday withdraw the money from an atm.

It would only work if the country was not part of the western block, as they all share information.

$3700 not a full blown mania? You want $10000.

The problem with selling is that it may continue to go up. I think it shows that people have lost faith in the financial and political system.
 
Time to start saving for the next crash and consolidation if you don't have a position yet. Each consolidation period is between 1-2 years so plenty to prepare for next mania.
 
i wonder what will happen next month when the Chinese find out the Chinese government will not undo the ban stopping people withdrawing bitcoin out the their exchanges. Atm the talk is the withdrawal ban will end in June.
 
bking3975 said:
In theory, if you had an overseas bank account or a foreign wife that has one, you could sell btc on a local exchange and have the money deposited into the foreign account. Then on your next holiday withdraw the money from an atm.
Click to expand...

That's it! I need to get myself a foreign wife. I'll just explain it to my local one in a cool, calm and rational manner....

....if you don't hear from me again you'll know what happened :p
 
BuggedOut said:
....but if the building mania in crypto keeps going on a parabolic course like it is, there is going to be a point where the rally becomes unsustainable and a serious correction inevitable. Taking the emotion out of it, as an investor there is a price for everything and there will be a point where it makes sense to cash out.
Click to expand...

Well, at >400% yearly gain for bitcoin and >1300% for Ethereum, is the time the cash out now?
It's a great train to ride until the day it's not.

upload_2017-5-25_18-41-40.png

upload_2017-5-25_18-43-18.png

* Fiat (AUD) - Pulling the money back to AUD might seem the safest option in a "flight to safety" from a crypto mania bubble, but with Australian tax law as it is I'd then be up for a substantial tax bill from the capital gains.
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If you've made huge gains, just pay the tax and be done with it maybe?
But it seems there isn't CGT on cryto's for private invetsment?
https://www.ato.gov.au/general/gen/...rrencies-in-australia---specifically-bitcoin/
It only says "as part of carrying on a business".
I presume it comes under the same rules as hobby income?
 
If you have acquired bitcoin as an investment, but are not carrying on a business of bitcoin investment, you will not be assessed on any profits resulting from the sale or be allowed any deductions for any losses made (however, capital gains tax could apply – although see the comments above about personal transactions). However, if your transactions amount to a profit-making undertaking or plan then the profits on disposal of the bitcoin will be assessable income.
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Sounds ambiguous to me. Wouldn't you say that "acquiring bitcoin as an investment" is effectively ensuring my "transactions amount to a profit-making undertaking"

I don't want to get audited and I don't want to get hit with a big fat tax bill retrospectively. Considering the tax bracket it would push my income into I am very reluctant to take the risk of the ATO interpreting my bitcoin transactions in an unfavorable way.
 
BuggedOut said:
Sounds ambiguous to me. Wouldn't you say that "acquiring bitcoin as an investment" is effectively ensuring my "transactions amount to a profit-making undertaking"
I don't want to get audited and I don't want to get hit with a big fat tax bill retrospectively. Considering the tax bracket it would push my income into I am very reluctant to take the risk of the ATO interpreting my bitcoin transactions in an unfavorable way.
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Why would selling your bitcoin push you into a higher tax bracket?
Profits from bitcoin should not be personal income, they should be at worst Capital Gains Tax events.
You'd be crazy to put down the profit from the bitcoins on your tax return as personal income. If they ask it's simply a "hobby" with the key phrase to tell them being "I had no reasonable expectation of making a profit".
 
Alright, you share the same quandary as many of us. We know we are in a bubble, however the bubble is currently supported and growing. Bubbles can last many years. My current position is that we are still in the beginning. There will be big ups and big downs with the total market cap like today (14 billion down) but there is still fresh money coming in from all directions. If you are paying attention there is a lot of big things happening which has caused us to go into a frenzy much like the .com bubble. Like the .com bubble there are legit companies and others that are simply not going to make it.I believe we are at a shift where normal people starting to get involved. I know just myself have gotten at least 15 people not including who they have introduced into this market. Big things happening in foreign countries and new exchanges opening left and right. Even still a study just came out showing only 3 million people own cryptos. There is a lot of room for expansion. The current market cap of 90 billion seems like a lot but it is still peanuts compared to many assets, especially when the market cap is made up of over 6000 different companies. I know you mentioned that you don't think we are at the mania yet and I believe you are right.

Usdt has gone through a lot of drama lately and fluctuates in price. When it is in demand the price can have up to a 28% difference between buyers and sellers. It's like any other coin.

If the market goes down alt coins will not save you. Even if you have the next Amazon of cryptos you will still take a temporary loss. Amazon went to over 100 usd in the .com bubble back down to 7 before becoming what it is today and who thought what started as a bookstore would become the giant it is.

Personally what I'm doing is holding the majority of what I have until signs tell me otherwise. At regular intervals I'm taking the cream off the top and holding the rest. I've realized over 5x what my starting capital was. Show me another investment that can do that in such a short period. It's hard not to be skeptical especially when things are going up so fast but I've had it in the back of my mind to sell every week for the last few months. Even sold over 200,000 ripple at 3 cents...look at in a month later.

When the money becomes more than you can handle to lose that is when you should exit. Also I have been buying silver through provident metals with bitcoin, that could be an option for you. However bitcoin is up 3x from when I started doing that haha

I think when the crash happens and it will there will be no preparing for it. Profit take a little for yourself here and there and enjoy the ride.
 
SilverDJ said:
Why would selling your bitcoin push you into a higher tax bracket?
Profits from bitcoin should not be personal income, they should be at worst Capital Gains Tax events.
You'd be crazy to put down the profit from the bitcoins on your tax return as personal income. If they ask it's simply a "hobby" with the key phrase to tell them being "I had no reasonable expectation of making a profit".
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From the ATO website :-

https://www.ato.gov.au/General/Capital-gains-tax/

You pay tax on your capital gains. It forms part of your income tax and is not considered a separate tax – though it's referred to as capital gains tax (CGT).
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When you hold the asset for less than 12 months there isn't even a discount anymore.

Aside - If there is anyone here with a professional tax agent or even financial adviser who is well clued up about cryptos, please let me know. Where I live they are in short supply.
 
Nabullion Dynamite said:
Alright, you share the same quandary as many of us. We know we are in a bubble, however the bubble is currently supported and growing. Bubbles can last many years. My current position is that we are still in the beginning. There will be big ups and big downs with the total market cap like today (14 billion down) but there is still fresh money coming in from all directions. If you are paying attention there is a lot of big things happening which has caused us to go into a frenzy much like the .com bubble. Like the .com bubble there are legit companies and others that are simply not going to make it.I believe we are at a shift where normal people starting to get involved. I know just myself have gotten at least 15 people not including who they have introduced into this market. Big things happening in foreign countries and new exchanges opening left and right. Even still a study just came out showing only 3 million people own cryptos. There is a lot of room for expansion. The current market cap of 90 billion seems like a lot but it is still peanuts compared to many assets, especially when the market cap is made up of over 6000 different companies. I know you mentioned that you don't think we are at the mania yet and I believe you are right.
Click to expand...

I would agree though I don't think we are going to get the "mums and dads" involved any time soon - that would signal a regular financial bubble. I think we boom/bust another 1 or 2 times before crypto goes mainstream. We simply can't keep this exponential price rise going. It's not sustainable. We will get a blow off/exhaustion top sooner or later and then start again off another low base. Next cycle might be 4-5 years.

Nabullion Dynamite said:
Personally what I'm doing is holding the majority of what I have until signs tell me otherwise. At regular intervals I'm taking the cream off the top and holding the rest. I've realized over 5x what my starting capital was. Show me another investment that can do that in such a short period. It's hard not to be skeptical especially when things are going up so fast but I've had it in the back of my mind to sell every week for the last few months. Even sold over 200,000 ripple at 3 cents...look at in a month later.

When the money becomes more than you can handle to lose that is when you should exit. Also I have been buying silver through provident metals with bitcoin, that could be an option for you. However bitcoin is up 3x from when I started doing that haha

I think when the crash happens and it will there will be no preparing for it. Profit take a little for yourself here and there and enjoy the ride.
Click to expand...

This is exactly what I'm doing. Have covered my original stake from early April and it's all cream from here. But I still am deluding myself that I can pick the top and time the market o_O

Well I'm going to try anyway. :cool:
 
Bitcoin dropped over 20% from peak to low in just a 3 hour period overnight. I think the South Koreans had a freak out episode.

This is how I expect it will happen. I'll just wake up one morning and there will be blood (red) everywhere.

BitcoinFlashCrash.png
 
BuggedOut said:
I would agree though I don't think we are going to get the "mums and dads" involved any time soon - that would signal a regular financial bubble. I think we boom/bust another 1 or 2 times before crypto goes mainstream. We simply can't keep this exponential price rise going. It's not sustainable.
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The volatility is the problem. A "currency" that can rise and drop 20% in a day relative to the official currency that is used by 99.9999999% of the population, and that just being a normal thing means that that crypto's are doomed for any practical mainstream use. The volatility has to be sorted before anyone will use them for anything but the speculation we are currently seeing.
 
All good points, I believe the mania is just getting started. The media storm has not even happened yet. But who knows, tomorrow regulations can come out and shut this party down.

I think the reason you will do well is you are actually planning an exit strategy. I can't tell you how many people I see across all the reddits, bitcointalk posts and forums on some of these coins that just say they are going to hold for 5 years or more...this party is not going to keep going for 5 years. I'm certain the few proven survivors would pay off well but not something like doge haha The rest will just be holding the bag when we cash out.
 
A newbie here trying to dip my toes into the water. I learned a lot from the many interesting chats here about BT. Would appreciate any help to join in this crazy party. Can any Stacker here kind enough to send me a few Satoshi for me to start my experience. Thanks in advance
My wallet: 1JhbhY6H8aCZZknyR4jFYmtLVD2uHaRWGK
 
whay said:
Would appreciate any help to join in this crazy party.
Click to expand...
i would suggest waiting until after the hard fork happens before putting any decent amount of money in. In the mean time see if you can buy like $50 worth from one of the guys here.

You will need more then a few satoshi, as the smallest fees these days is around $1.5 - $2 USD (depending on network load) Fees are based on byte size not amount. So sending $1 or $1000 will still cost you around $1.50+ in fees.
 
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