Increasing the probability that in 10 years your coins are well used by the world. How to organize and view your assets in a realtime customizable investment portfolio. Cryptoasset inheritance planning based on teachings by Pamela Morgan and Andreas Antonopoulos. Lost funds and wallets, lost passwords, passphrase or recovery word phrases. Corporation and high networth individuals investment planning and execution.
Crypto hedge investment fund considerations and performance metrics. Shane is also available as a cryptocurrency expert witness for litigation support and has represented clients in divorce cases and theft. The rates below are for individuals, please contact Shane regarding group rates. Sessions are conducted with secure video and screen sharing using Zoom or Signal prorated to 5 minute increments. As a young man Shane was inspired by the financial wisdom of greats like Warren Buffet and Charlie Munger.
A self-professed "computer nerd", Shane spent the first decade of his career developing automated Futures arbitrage strategies that would ultimately prove very lucrative and help fund his dream of living a financially free life.
Shane is passionate about CryptoCurrencies and alternative investments- and loves sharing his knowledge with others. He lives in Boulder, CO with his wife and son and in his free time enjoys hiking, reading and spending time with his family. A note about storing cryptocurrency: I recommend anyone with a meaningful value of digital assets to use cold storage while using a third party to hold their private keys such as Kingdom Trust or Bitgo. Custodians are used to protect against physical theft.
Private keys should never be in one place or at home. Staats CryptoCurrency Consulting. The following is a list of areas Shane specializes in: Basic Basics of Blockchain and cryptocurrencies. Shane Staats. Getting started. Read More. DeCicco was working as a nurse at the time she was hacked. She was mining ethereum in her garage as a hobby, and she said the "very devastating experience" completely changed her career trajectory. She offers consulting to individual investors and businesses.
Along with running her own consulting firm, DeCicco works as the vice president of business development at Blockchain Mint and Cold Storage Coins. Both companies produce crypto-related products in the form of tangible assets including gold and silver coins.
Through her services, DeCicco teaches investors how to navigate the crypto markets, including buying, selling and trading digital currencies, and offers crypto webinars that dive into the basics of digital currencies and the blockchain. She also shows clients how to monitor their investments and decrease their risk of losing money. Catching the buzz. Cryptocurrency is buzzing in pop culture, too.
Pricey advice. The consultant offerings range from investment advice to tech help and assistance for people who want to set up their own cryptocurrency mining rigs at home. And the prices vary, too. Cryptocurrency consultant Shane Staats started his career working in e-commerce and tech support in But he says some of his clients only need one session, and then they're off to the races.
Crypto consultant Russ Davis, who has pursued a variety of ventures in the last decade, including credit card processing, has seen his business, In Russ We Trust Crypto, take off this year. He said he consulted about investors in February — a group made up of his friends, family members, and Facebook group followers.
Since then, Davis says he has established a list of celebrity clients. Risky business. As with the market itself, crypto consulting is totally unregulated, so consultants don't technically need official qualifications, and there is no way to know exactly how many advisers are pursuing this career path. And as the public is becoming increasingly interested in investing in crypto, a huge part of the education process involves acknowledging the intense volatility in digital currency values.
With HODL, investors usually buy Bitcoin or other cryptocurrencies and hold them for an extended period, ignoring short-term fluctuations. Additionally, cryptocurrencies that yield dividends are also effective for long-term investment. Holding onto assets can yield both dividend and price appreciation for investors. Here is a list of such digital assets:.
Note, however, that investing in a cryptocurrency market requires a systematic approach. An appropriate investment strategy is mandatory in order to make any investment decision. Investors should have a well-researched trading strategy that is effective in the market and has a long history of providing returns. However, investing in the cryptocurrency market is different from traditional forex or the stock market. For this reason, it requires some exclusive and effective investment strategies.
And yet another strategy is asset reallocation, where investment decisions are made after analyzing macroeconomic factors. The new route to long-term investment success depends on the execution and management of risks. To get the maximum output, investors should include a time horizon and risk assessment in their strategy.
They must have a clear knowledge about how long they want to hold the investment — and how much risk they can afford. A long-term investment is cheaper than trading, but investors should be concerned about some high costs before jumping into the market. Below are some of the costs of long-term investing in cryptos:. This opportunity comes from watching the price chart for an extended time and observing when it suddenly crashes to a substantial lowest price, seen as a short-term decline.
Therefore, if anyone bought at the lower value, it would be considered as a buy dip. However, the financial market zigzags, forming swing highs and swing lows. So it is often difficult to find the actual dip. The best method is to find a strong bearish pressure in the market that induces multiple lows. Finally, a good cryptocurrency exchange with a reliable price and low cost is an excellent resource when buying a dip. Overall, the success in buying a dip depends on the potential of the particular crypto for future growth.
One of the best examples is Bitcoin, which crashed during the Covid pandemic. Investors who bought that dip and HODLed are now enjoying triple-digit profits. There is no exact way to say that long-term investment is more potent than a short-term investment.
However, dividing your investment into both short-term and long-term outlays as a part of portfolio diversification is clearly recommended. Lastly, having a solid knowledge of technical analysis , which refers to anticipating the price movement of a cryptocurrency by observing past price behavior, is important to understanding market behavior.
Be the first to get critical insights and analysis of the crypto world: subscribe now to our newsletter. Buy Crypto. Bybit Learn. What is Long-Term Investment? Crypto Crypto Investment Guide Trading. The following are all possible scores from the framework: 1, 2, 3, 3. There is enhanced gradation between scores of 3. The scores reflect an independent analysis by the Crypto Rating Council, LLC and is intended as a tool to help members evaluate and weigh factors that may be relevant to the potential classification of a digital asset under federal securities laws.
The score does not reflect a legal conclusion and is no indication of qualitative value of an asset or suitability for investment or any other purpose and is solely for use by the CRC and not for reliance by any other party. Classification of a digital asset as a security is a fact and circumstances determination and no one factor is necessarily dispositive as to whether an asset would be deemed a security.
A quantitative ranking may not necessarily be reflective of the likelihood of classification as a security, and only should be considered together with all relevant facts and circumstances. Moreover, the analysis concerning digital assets as securities may evolve over time the nature of digital assets, applicable precedent and SEC statements and interpretations change and evolve. The analysis underpinning each score published here is based on a limited review of factual information publicly available or otherwise made available to the CRC.
We do not assume any responsibility for the completeness of the information upon which our analysis and score is based. It is possible that if additional facts where known or assumed or understood facts prove to be incorrect, the analysis and resulting score would be materially different. Algorand Foundation is a governance and research organization facilitating participation and development on the Algorand platform Algorand Inc.
Designed to function as a protocol that allows users to create their own market predictions Mainnet launch took place in July ; the launch of Version 2 is still to be determined. Designed to reward and incentivize usage of the Brave Browser and viewing of targeted advertisements Token sale took place in May BAT tokens were integrated into the Brave Browser system developed by Brave Software Inc.
Designed as a decentralized digital currency that can be sent from user to user on the peer-to-peer Bitcoin network without the need for intermediaries Uses a Proof-of-Work PoW system The Bitcoin network was created on January Fully open-sourced Asset last reviewed: August 21, Designed to bridge the gap between on-chain smart contracts and off-chain businesses and data The ChainLink mainnet went live in May ChainLink interfaces with Smart Contracts on the Ethereum blockchain, and is intended to work with multiple networks in the future.
Designed to facilitate access to Cosmos, a blockchain development and interoperabilityplatform Uses a proof-of-stake consensus mechanism Mainnet launch took place in March The ATOM fundraising event took place April , reportedly raising approximately 4. As of January 14, , there were reportedly master nodes and approximately master node owners, running an average of 4 nodes each, with one node owner running master nodes Dash Core Group has historically led the majority of technology development for Dash The Dash Core Group filed a provisional patent relating to its platform called Evolution in March , but has reportedly generally open-sourced their code under the MIT license Asset last reviewed: October 16, The EOS.
IO mainnet EOS blockchain is designed as an open-source blockchain protocol designed to provide a platform on which to build, deploy and run high-performing decentralized applications The EOS. Designed as an open source, public, blockchain-based distributed computing platform and operating system featuring smart contract scripting functionality Uses proof of work consensus Ethereum in its original form, and what would eventually become Ethereum Classic mainnet went live in July Designed to function as a cryptocurrency for transactions settlement with enhanced privacy features Uses the Equihash Proof-of-Work PoW mining algorithm Formerly known as ZenCash, Horizen is a fork of ZClassic, which itself is a fork of Zcash.
Horizen forked from Zclassic in May Horizen then ZenCash launched its mainnet in November Secure nodes act as master nodes and require staking 42 ZEN; Super nodes requires taking ZEN, among other storage and computational requirements Reportedly 30, nodes, and 20, node operators, as of November 6, The Zen Blockchain Foundation plays an ongoing role in the development and adoption of the Horizen network Asset last reviewed: October 16, The IOTA network is designed to facilitate transactions settlement, shared computational resourcing bandwidth, storage, etc.
Designed as a peer-to-peer Internet currency that enables instant payments to anyone in the world Uses a proof of work consensus system The lightning beta version went live on Litecoin mainnet in August LiteCoin Core has released updates to the system to fix bugs and improve performance.
Litecoin released Litecoin Core 0.
So you need to calculate your cost basis and the fair market value of your crypto at the point of disposition. To keep it simple, let's say the price of ETH hasn't changed since you bought it. This is your disposition - you need to report this to the CRA as a disposition, regardless of the fact you have no capital gain or loss. Of course, doing this for every transaction can be time-consuming, but Koinly can help you do this with our "treat transfer fees as disposals" setting.
If you're investing in DeFi protocols - the vast majority of these protocols use liquidity pools. On the surface, we can liken this to transferring your asset to another wallet or exchange. You're not disposing of the asset and you can take the original asset back at any point. In some instances, this will be true.
But many DeFi protocols now give investors a token that represents their share in the liquidity pool - so you're swapping your crypto for another asset. Crypto-to-crypto swaps are a taxable event as you're disposing of one asset for another - even if you then get that asset back later, you're still swapping a token for it.
This could be subject to Capital Gains Tax. If the CRA do think of moving liquidity as a disposition where LP tokens are involved - then it's likely that any gas fees you pay as a result would be deductible as they can be thought of as transaction fees related to a buy or sell. It's important to note the CRA hasn't given any guidance on this yet - so you should speak to an experienced crypto accountant who can advise you on these transactions.
The CRA has no specific guidance on how airdrops and forks are taxed in Canada - but we can infer their tax treatment from their guidance on what is considered business income. F orks and airdrops are unlikely to be taxed as income on receipt, but you will pay Capital Gains Tax when you later sell coins or tokens you received from an airdrop or hard fork.
The Canada Revenue Agency is unlikely to view airdrops as a type of income, as long as you're seen to be trading as an individual and not as a business. However, you will pay tax when you later spend, swap, gift or sell coins or tokens received from an airdrop.
Crypto you received from an airdrop will be treated the same as any other crypto when you later spend, swap, gift or sell it. So you'll pay Capital Gains Tax when you dispose of this crypto. Your cost basis is zero, so your entire proceeds are considered a capital gain. You receive 1INCH tokens from an airdrop. To calculate your capital gains, subtract your cost basis from the sale price.
So for individual investors, it's likely you wouldn't pay any tax when you receive coins from a hard fork. But you will pay Capital Gains Tax on your crypto assets at the point you dispose of them by selling, swapping, spending or gifting them. Gifting crypto in Canada is seen as a disposition of an asset and it's subject to Capital Gains Tax. But donating crypto to a registered charity is a tax free event. When you give a crypto as a gift in Canada, you'll pay Capital Gains Tax on any profit.
This is seen as a disposition of an asset by the CRA. The recipient of the gift uses the FMV of the asset the day they received it as their cost basis should they later wish to sell it. Remember, you'll only pay Capital Gains Tax on half of any capital gain. As your gift is viewed as a disposition, Capital Gains Tax applies. The gift recipient will be liable for capital gains tax when they dispose of the assets.
Donating crypto is tax free in Canada - so find a worthy cause and spread the love. Make sure you donate to a qualifying donee - so a registered charity. You can confirm the registered status of a charity on the Canadian government's website. Other worthy causes like crowd funders may not qualify. The news keeps on getting better because you can also use donations to reduce your tax bill if you qualify for the Charitable Tax Credit.
Any unused donations can be carried forward for the next 5 tax years. The CRA guidance on crypto mining tax all revolves around the scale and intentions of your crypto mining activities. If you're seen to be acting as an individual , you'll only pay Capital Gains Tax when you dispose of mined crypto. If your mining is more akin to business income , you'll pay Income Tax instead. If the CRA view your crypto mining activities as a hobby - you won't pay Income Tax when you receive mined coins.
You will however pay Capital Gains Tax when you later dispose of mined coins by selling, swapping, spending or gifting them. Because the cost basis of mined coins is zero - all proceeds from a disposition are considered a capital gain. If you're in the business of mining, the cryptocurrency you hold is considered as inventory and you need to use one of the two methods to value it:.
Valuing each item at either its acquisition cost or its fair market value at the end of the year, whichever is lower. Valuing the entire inventory at its fair market value at the end of the year the price you would have to pay to replace an item or the amount you would receive if you sold an item. You can use either the cost or the fair market value to value your inventory, whichever is lower. In fact, you can use the lower value for each specific cryptocurrency you have which makes tax planning even better.
Here cost refers to "cost at which the taxpayer acquired the property" along with all reasonable costs incurred to buy the property. You also need to be consistent and use the same method to value your property, year-on-year.
It's also important to remember, of course, that the income from selling mined cryptocurrency will become part of your business income and be taxed accordingly. Costs associated with mining like electricity, equipment etc. Some cryptocurrencies don't use proof-of-work mining and instead use proof-of-stake PoS. Examples of this include Polkadot, Solana, Avalanche and Cardano.
Staking in this context serves a similar function to mining - a network participant gets selected to add the latest batch of transactions to the blockchain and earn crypto in exchange. Staking through PoS helps secure the blockchain - by staking you are part of the process of creating new tokens. This is different to other forms of staking such as DeFi lending, where you effectively lend your crypto through a protocol such as AAVE and receive interest in the form of crypto from borrowers on the other side of the transaction.
The taxable amount will be the FMV of the tokens earned through staking on the date they are received. You will also pay Capital Gains Tax when you later dispose of the tokens earned from staking if you sell, swap, spend or gift them.
The base cost will be the FMV on the date you received the tokens. Meanwhile, the disposition price will be the FMV on the day you sell, swap, spend or gift the tokens. The tax treatment of crypto margin trading, derivatives products like Bitcoin futures and other CFDs all depends on whether you're seen to be acting as a day trader or an individual investor. So it will all depend on the scale at which you're trading - but let's look at both scenarios and the taxation. If you're seen to be trading as an private investor - you'll pay Capital Gains Tax on profits from margin trades, derivatives and other CFDs.
So when you open a position, you won't pay tax. It's only when you close your position that you'll realize a capital gain or loss and pay Capital Gains Tax on any profits. In the instance of liquidation - when your collateral is sold - this is a disposition from a tax perspective. Like above, you won't pay tax when you open a position in a margin trade, derivative or another CFD - you'll pay tax at the point you close the sale.
This doesn't mean you won't pay tax on DeFi investments - it just means you need to look at the current crypto tax rules in Canada and infer the likely tax treatment of DeFi investments. As we already know from this guide, the tax treatment of crypto in Canada all boils down to whether it's seen as business income or a capital gain. You'll have business income anytime you're intending to make a profit or if you have regular and repetitive activities.
That's going to be the case for the majority of DeFi investors which means it's likely a lot of your DeFi investments are going to be taxed as income , not as a capital gain. Anytime you're 'earning' crypto - like business income - this is likely to be subject to Income Tax. Meanwhile, anytime you're disposing of crypto - this is likely to be subject to Capital Gains Tax. It is advisable to speak to an experienced tax accountant about your specific DeFi investments.
This said, from the current rules, we can infer DeFi would likely be taxed as the following:. As we already said, the tax treatment of your DeFi investments is all going to come down to whether the CRA views you as an individual investor or sees your crypto investments as more akin to business income.
They decide this on a case-by-case basis - but if you're seen to be trading as an individual, you'll pay Capital Gains Tax on any profits, not Income Tax. If your DeFi transactions are regular, repetitive, intending to make a profit or of a commercial nature, you'll pay Income Tax on the entirety of your profits from DeFi investments instead of Capital Gains Tax on half.
The CRA decides what is deemed to be business income or capital gains on a case by case basis so you should speak to a tax advisor for further advice on how your investments may be viewed. NFTs are another area of crypto which have exploded in the past year.
This means NFTs will be subject to the same tax rules as other crypto assets. The tax treatment of the NFT will depend on how you interact with them. Simply minting or buying an NFT is not a taxable event. Creating and selling an NFT is akin to creating and selling any other product, and therefore qualifies as business income which will be subject to Income Tax. As well as this, farming NFTs for a staking reward will likely be considered to be income in the same way DeFi staking rewards would be.
They are effectively member-owned communities without central leadership. Instead of a small Board of Directors making decisions about the company, DAOs enable the community of token holders members to vote on the future of the organization. A good example of this is Uniswap.
Holders of UNI tokens vote on issues relating to the protocol - for example, how transaction fees are used and what new features to add. For example, they might receive a share of the profits which result from the activities of the DAO or they might sell their DAO tokens to investors.
However, given the DAO is not a registered entity in any jurisdiction and has no central control, it cannot pay taxes itself. Under this interpretation, any income passed on to the members of the DAO would likely be subject to Income Tax, and sale of DAO tokens which have appreciated since acquiring them would be subject to capital gains taxes.
Yes - spending crypto on goods or services is a disposition of an asset and it's subject to Capital Gains Tax. Whatever you're buying - if you're spending your crypto on goods and services, the CRA views this as a disposition of a capital asset. You'll need to calculate any capital gain or loss by subtracting your cost basis from the fair market value of your crypto on the day you spent it.
The CRA is fairly clear on the fact that you have to keep extensive records of your crypto transactions. The problem with exchanges is that there is no standard for the records they keep and how long they keep them. This means that the onus is on the taxpayer to periodically export information from these exchanges to make sure they are maintaining meticulous records.
You need to keep all of the required records along with supporting documents for at least six years from the end of the last tax year that the records relate to. You can use Koinly for your record keeping without paying anything! Just sync your exchange accounts via read-only API keys and your blockchain wallets using your public keys or addresses.
Koinly will then sync your transaction history automatically from time to time - so you'll always have great records of your crypto transactions. It would be good practice to export all of your exchange data from Koinly at the end of each tax year. You should download and save this data so you have backing data in the event the exchange is unable to provide this in future. The CRA can challenge your cost basis if you do not have supporting evidence , so this could be vital to ensuring you do not end up paying too much tax.
Canada uses the adjusted cost basis method when calculating crypto capital gains and losses. This means you need to track the costs involved in acquiring your crypto assets carefully. This is simple to do at a small scale - so if you're only trading occasionally and you don't have a lot of assets. But if you're trading multiple assets of the same kind over several years - this can get a lot trickier to keep track of. For example, you have 20 ETH that you bought over the course of two years for different prices.
In this case, the CRA say you can use the average cost of each property. In this case, you'd add up your total cost basis for a group of assets and divide it by the amount of assets in that pool to give you your cost basis. So in the example above, you'd add up the cost basis for each ETH you purchased and divide it by 20 to get your cost basis for each ETH.
This allows you to calculate your capital gain or loss when you dispose of that ETH over multiple transactions. The adjusted cost basis method is easily manipulated though. In theory, investors could simply sell multiple assets at a loss in a given pool and immediately buy them back to create artificial losses to reduce their tax bill. This is what's known as a superficial loss or a wash sale and the CRA has a specific rule to prevent it. The Superficial Loss Rule kicks in when both of these conditions are met:.
What all this means is if you sell and buy assets of a similar kind within a 30 day period - you can't offset these capital losses against your capital gains. Note: interest expenses related to borrowing on a DeFi platform will not be deductible against capital gains. In Canada, where borrowing to buy an asset which only generates capital gains , the interest cost is not deductible against the capital gains. But when borrowing to invest in a something which generates income, the interest can be deducted against that income.
The Canadian financial year is the same as the calendar year so it runs from the 1st of January to the 31st of December every year. That means the tax year that Canadians are reporting on is 1 Jan to 31 Dec Canadians need to report crypto income, capital gains and losses to the CRA from 21 February to 30 April Similarly, your payment will be considered made on time if it is received by the CRA, or processed at a Canadian financial institution, on or before 2 May If you're self-employed you have until the 15th of June You'll report all your crypto taxes in your annual Income Tax Return.
Calculating your crypto taxes so you can accurately report them to the CRA can take hours - if not days if you trade at volume! You can do it all manually, or you can use a crypto tax app like Koinly to save you hours.
If you have a higher net capital loss than your net capital gain, remember you can carry capital losses forward to future tax years to offset against future gains. Report crypto capital gains and losses on Schedule 3 Form. Don't get stuck in the busywork. Don't get it wrong. Don't rely on your accountant to know where to look.
Use Koinly to generate your Canada crypto tax reports. Here's how easy it is:. Koinly supports the adjusted cost basis method with superficial loss rule for Canadian users. This is the only cost basis method the CRA allows, so you shouldn't change it. Koinly integrates with more than crypto exchanges, wallets and blockchains. See all If you can't find yours, let us know - we're always adding more. Koinly will calculate each capital gain or loss from your dispositions, as well as your crypto income and expenses.
Head to the tax reports page in Koinly and check out your tax summary. This includes your net capital gains, other gains, income, costs, expenses and any gifts, donations or lost crypto. Download what you need, when you need it. Use the generated file to complete your Income Tax Return or send it over to your accountant.
The deadline to pay your taxes in Canada is the same day as the deadline to file - - so for the tax year this is the 30th of April For the tax year this is the 30th of April This is why we recommend filing well ahead of the deadline to ensure you're not stuck in the lurch with a large tax bill. Once you've filed, the CRA will let you know how much tax you owe on your crypto and give you options for payment. Want to know how to avoid tax on cryptocurrency in Canada?
You can't outright avoid all your taxes - but there are a few ways to reduce your tax bill down by a sizeable amount! You can see our complete guide to avoiding crypto tax, but in short:. Investing in a Retirement Savings Plan can help you prepare for the future an reduce your tax bill. You can deduct contributions to RSAs from your tax bill. You can also contribute to a spousal RRSP and deduct this too! The ETFs track the price of Bitcoin and are aimed at individuals who wish to invest in Bitcoin without having to deal with the security and technical aspects of self custody.
Whilst they are an easy way to get exposure to Bitcoin, you do not own the Bitcoins themselves, and they can also carry high management fees. You can offset half of your capital losses against your capital gains in Canada. If you still have losses left over, you can carry them forward to future tax years and even apply them retrospectively to previous tax years to get a tax refund. Your losses are only realized once you dispose of your asset by selling it, swapping it, spending it or gifting it.
But you'll have an unrealized loss if the price of your asset has depreciated since you bought it. If you're facing a large tax bill, you can sell these assets at a loss to reduce your tax bill. You can even buy them back later - but make sure to leave this more than 30 days to avoid the superficial loss rule. Donations help you earn Provincial and Federal Tax Credit that you can use to offset your tax bill. So find a worthy cause and give generously!
Remember, you'll need to make any moves to optimize your tax position within the financial year so before the 31st of December for the tax year or before 31st December for the tax year! There are many crypto exchanges that cannot operate in Canada. To make matters more confusing - some have only been banned in certain provinces, for example, you can't currently use Binance in Ontario. Similarly, while you can use Kraken in Canada - some features like crypto futures trading - are limited for Canadian users.
Your best bet for a safe crypto exchange is to use a Canadian crypto exchange that is registered in Canada and approved to operate there. Some of the most popular include:. The Canada Revenue Agency has confirmed they're contacting crypto investors to notify them of pending audits.
Those who are selected for a crypto audit will receive a 13 page form packed full of questions about their crypto dealings. The CRA are identifying crypto investors based on data shared from cryptocurrency exchanges. Beyond Coinsquare, the CRA haven't confirmed any other crypto exchanges they've submitted data requested to. The best way to avoid an unwelcome audit from the CRA is to report and pay your crypto taxes accurately.
Make it easy by using Koinly. This guide is regularly updated One quick thing before we jump into it - the rules on crypto tax in Canada are in constant flux. Deadline is 2 May as 30 April falls on weekend.
Is cryptocurrency taxable in Canada? Can the CRA track crypto? Standard long-term investment occurs when company X holds a significant investment of company Y without having a majority of voting shares. Bill had started investing at the age of 36, while Joe waited until he was In the example, the return has been doubled for the same investment simply because Bill started ten years before Joe. This illustrates how a long-term investment option is more beneficial than a short-term investment due to accrued interest.
A long-term investment is a reliable way to maximize the return for a stable asset. Many individuals who lack knowledge about technical analysis and market behavior depend mainly on long-term investment. Investing in a trading asset is not a long-term strategy. However, investors can choose it with the intention to sell after some years. In that case, it will be considered as a non-current asset item on the balance sheet, and its benefit will be shown on a fair value basis.
As a result, it is effective for institutions that want to increase the value of their assets, and get benefits as other comprehensive income to the income statement. However, long-term investment requires a significant investment amount that is often difficult to hold for many individuals or institutions. In short-term investment, traders make money from a short-term price fluctuation that may provide more profits than just holding onto the asset.
As a result, long-term investments are often risky because there is no way to change investment decisions after execution. However, considering the brokerage fees, capital gain tax, and professional fees, long-term investment is cheaper and requires less effort. Overall, long-term investing is a great way to diversify a portfolio in emerging markets, such as Bitcoin or other cryptocurrencies, while holding short-term investments in traditional markets.
With HODL, investors usually buy Bitcoin or other cryptocurrencies and hold them for an extended period, ignoring short-term fluctuations. Additionally, cryptocurrencies that yield dividends are also effective for long-term investment. Holding onto assets can yield both dividend and price appreciation for investors.
Here is a list of such digital assets:. Note, however, that investing in a cryptocurrency market requires a systematic approach. An appropriate investment strategy is mandatory in order to make any investment decision. Investors should have a well-researched trading strategy that is effective in the market and has a long history of providing returns.
However, investing in the cryptocurrency market is different from traditional forex or the stock market. For this reason, it requires some exclusive and effective investment strategies. And yet another strategy is asset reallocation, where investment decisions are made after analyzing macroeconomic factors.
The new route to long-term investment success depends on the execution and management of risks. To get the maximum output, investors should include a time horizon and risk assessment in their strategy. They must have a clear knowledge about how long they want to hold the investment — and how much risk they can afford.
A long-term investment is cheaper than trading, but investors should be concerned about some high costs before jumping into the market. Below are some of the costs of long-term investing in cryptos:. This opportunity comes from watching the price chart for an extended time and observing when it suddenly crashes to a substantial lowest price, seen as a short-term decline. Therefore, if anyone bought at the lower value, it would be considered as a buy dip.