Bitcoin is still early

[ShredtheGnar]

Thanks Napoleon for sharing your BTC/crypto journey. Your success is well deserved. I'm a typical MD in regards to my attitude towards crypto. Up until this Summer, I was a non-participant, semi-hater. However, a surgeon friend has been mildly prodding me to invest in at least BTC since January, and I finally took the dive into the rabbit hole this June. Interestingly enough, the spark for me was a Lex Fridman podcast with Vitalik B, which led me down a deeper hole into studying the Craig Wright Faketoshi story (long story short-- he's a total scammer).

I used an exchange which allowed smaller daily deposits (I refuse to entrust Plaid with my banking credentials). Over the past four months, I've DCA about 3% of my investable assets in the following ratio: BTC 60% ETH 25% (mirroring the approximate overall Market Caps in relation to each other) SOL 5% ADA 5% and 5% Other (usual suspect three and four letter Tokens/Projects). I've attempted to create my own "Index Fund" of crypto. I stumbled upon this thread last month, and read thru each page, which has been a fun and enlightening read. Kudos again to Napoleon.

I also made a huge mistake at the end of August. I became impatient with my DCA strategy with taxable dollars, and was eager to quickly increase my crypto position. After some research (nowhere enough), I roughly doubled my overall crypto allocation by purchasing shares of Grayscale GDLC at its near peak. It's currently down approx. 50%; a blow that's lessened by the fact my taxable crypto is up roughly 40% since June.

For those in the know, what exit strategy would you recommend for my GDLC holdings? On the one hand, I haven't "lost" any money until I sell. On the other, seeing this less than ideal fund in my 401k is a constant eyesore. I'm also worried that the BTC Futures and impending spot ETF approval will cause GDLC to crash even further. Any advice would be helpful.

Despite my horrible GDLC timing, I'm very bullish on crypto, namely BTC and ETH. My plan is to exit out of GDLC, but maintain my overall crypto exposure to 3-5% of all investable assets (my home in a high COLA represents approx. 40% of my net worth, but I never plan on selling)

Thanks!

GDLC has 65% BTC and 25% ETH as it’s top 2 holdings. I would just sit on it until it goes up before selling. Has a high expense ratio but is giving you exposure to other top market cap coins. It will more than likely go up above your cost basis in a fairly short time (within a year). It’s probably one of the most volatile assets out there.

[CBZ]

Thanks for your advice, it mirrors what some colleagues who are much savvier and experienced traders have advised me as well. I am worried, however, that a BTC spot trading ETF approval may tank this fund. If/when the NAV ever hits $40, I may sell. Part of the reason I’m “OK” with this loss, aside from the profit I’ve made holding crypto in cold storage, is the Doximity trade I made this Summer. I was lucky enough to purchase 250 shares pre-IPO— and cashed out at $96. Helps offset the GDLC loss mentally and in reality.

[jacoavlu]

why not just sell the gldc. if you’re holding it in a 401k there are no tax consequences. i think the above advice makes no sense. and you’ll be better off to ignore “savvy” people and “experienced traders”

[Zaphod]

Had to look that up but its got almost a 30% discount to nav, that really hurts. Not sure how its down so much over this time but these things are weird. The closer we get to accessible btc etfs the less attractive these are. Normally with this kind of discount you'd want to hold and let the discount close to nav, but thats all EMH stuff and doesnt have to happen in real life.

Mostly these are an avoid type of holding.

[CBZ]

Had to look that up but its got almost a 30% discount to nav, that really hurts. Not sure how its down so much over this time but these things are weird. The closer we get to accessible btc etfs the less attractive these are. Normally with this kind of discount you'd want to hold and let the discount close to nav, but thats all EMH stuff and doesnt have to happen in real life.

Mostly these are an avoid type of holding.

Absolutely-- Grayscale is a reputable company, I blame myself for being ignorant about the "premium" at which I purchased shares, and also my greed in believing BTC (and ADA to an extent) would pop in September, and wanted to quickly double my exposure to BTC et al. The Grayscale Trusts are less than ideal exposure to BTC; but at that moment in time, the only proxy for crypto that I could access in my 401k.

Appreciate the input; if anything, let mine be a cautionary tale. That being said, when the BTC spot trading ETF is approved by the SEC, you can bet I'll purchase some in my 401k to replace the GDLC dog.

[ShredtheGnar]

why not just sell the gldc. if you’re holding it in a 401k there are no tax consequences. i think the above advice makes no sense. and you’ll be better off to ignore “savvy” people and “experienced traders”

Please note that Grayscale holds a huge portion of the finite supply of BTC. GDLC trust currently holds $396,912,190.00 in BTC and $155,710,762.00 in ETH. Also, it is my understanding that the ETFs in the works are for futures not the actual coins. I still say the value of GDLC will probably go back up based on this info. Well, to add, this is only 0.03% of all Bitcoin in GDLC but Grayscale has $38,700,000,000 in BTC in GBTC. So overall they might be one of if not the largest holder of Bitcoin(3.37%).

Appears that Grayscale is also committed to converting at least GBTC into ETF form. Not sure how this plays out for holders of the OTC traded products. Could work out in their favor. Any ideas on how this would work? https://www.globenewswire.com/news-r...d-of-ETFs.html

[jacoavlu]

Please note that Grayscale holds a huge portion of the finite supply of BTC. GDLC trust currently holds $396,912,190.00 in BTC and $155,710,762.00 in ETH. Also, it is my understanding that the ETFs in the works are for futures not the actual coins. I still say the value of GDLC will probably go back up based on this info. Well, to add, this is only 0.03% of all Bitcoin in GDLC but Grayscale has $38,700,000,000 in BTC in GBTC. So overall they might be one of if not the largest holder of Bitcoin(3.37%).

Appears that Grayscale is also committed to converting at least GBTC into ETF form. Not sure how this plays out for holders of the OTC traded products. Could work out in their favor. Any ideas on how this would work? https://www.globenewswire.com/news-r...d-of-ETFs.html

my point

if one holds some asset that they no longer want to hold, they should get out instead of “waiting for it to go back up” and then sell it. that’s nonsensical especially if there is no tax consequence.

if the subject wants to maintain BTC exposure then they should buy BTC directly, and if they can’t do that then well we can talk about other ideas

[NapoleanDynamite]

Thanks Napoleon for sharing your BTC/crypto journey. Your success is well deserved. I'm a typical MD in regards to my attitude towards crypto. Up until this Summer, I was a non-participant, semi-hater. However, a surgeon friend has been mildly prodding me to invest in at least BTC since January, and I finally took the dive into the rabbit hole this June. Interestingly enough, the spark for me was a Lex Fridman podcast with Vitalik B, which led me down a deeper hole into studying the Craig Wright Faketoshi story (long story short-- he's a total scammer).

I used an exchange which allowed smaller daily deposits (I refuse to entrust Plaid with my banking credentials). Over the past four months, I've DCA about 3% of my investable assets in the following ratio: BTC 60% ETH 25% (mirroring the approximate overall Market Caps in relation to each other) SOL 5% ADA 5% and 5% Other (usual suspect three and four letter Tokens/Projects). I've attempted to create my own "Index Fund" of crypto. I stumbled upon this thread last month, and read thru each page, which has been a fun and enlightening read. Kudos again to Napoleon.

I also made a huge mistake at the end of August. I became impatient with my DCA strategy with taxable dollars, and was eager to quickly increase my crypto position. After some research (nowhere enough), I roughly doubled my overall crypto allocation by purchasing shares of Grayscale GDLC at its near peak. It's currently down approx. 50%; a blow that's lessened by the fact my taxable crypto is up roughly 40% since June.

For those in the know, what exit strategy would you recommend for my GDLC holdings? On the one hand, I haven't "lost" any money until I sell. On the other, seeing this less than ideal fund in my 401k is a constant eyesore. I'm also worried that the BTC Futures and impending spot ETF approval will cause GDLC to crash even further. Any advice would be helpful.

Despite my horrible GDLC timing, I'm very bullish on crypto, namely BTC and ETH. My plan is to exit out of GDLC, but maintain my overall crypto exposure to 3-5% of all investable assets (my home in a high COLA represents approx. 40% of my net worth, but I never plan on selling)

Thanks!

It makes me happy that you took the time to learn. With the exception of a few trolling posts that I made, that was the entire reason I started discussing this. I am glad that WCI has let it stay open despite his feelings toward crypto. I think you will be happy with your decision in 10 years.

As for the Greyscale fund...I would not recommend selling right now. Although the future can never predicted, Barry Silbert is strongly trying to convert his funds to a BTC Spot ETF as mentioned above. Although I have never bought any GBTC, I am strongly considering it with a small portion of my funds that cannot easily access BTC at this time. Right now it's trading about 15-20% discount to NAV and that discount is likely to significantly improve IF they are able to convert to an ETF.

However, if they cannot convert to an ETF, then they will be competing with a likely future BTC ETF (and already are with Canadian ETF). If that is the case, then there is some risk to GBTC long term.

If I were you, I would hold the GDLC at this time. But I'm definitely not intelligent enough to offer good advice on this. So please DYOR on this one.

[tomato14]

How will people be doing their taxes that have been active in crypto? any tax software recos? or other strategies?

[jacoavlu]

How will people be doing their taxes that have been active in crypto? any tax software recos? or other strategies?

proceeds minus cost basis equals realized gain (or loss). short term gain (or loss) if held less than one year.

[xraygoggles]

How will people be doing their taxes that have been active in crypto? any tax software recos? or other strategies?

TaxBit or Koinly are good options, if you made a lot of trades. I think they even sync with Coinbase, BlockFi, etc.

If you only have 1 or 2 coins, and only made a few trades, do it manually I guess.

[jacoavlu]

TaxBit or Koinly are good options, if you made a lot of trades. I think they even sync with Coinbase, BlockFi, etc.

If you only have 1 or 2 coins, and only made a few trades, do it manually I guess.

trust but verify

i checked out taxbit once when the market dumped and i was curious if it could tell me unrealized losses

the “integration”’ w various exchanges didn’t work. i lost interest in about 10 minutes. i wouldn’t rely on it

keep a spreadsheet. and better yet don’t trade.

[nycEMMD]

How will people be doing their taxes that have been active in crypto? any tax software recos? or other strategies?

Long time lurker, had to make an account to answer this

There's two different taxes you need to consider with crypto:

1. For any crypto you bough and then sold, you have to pay capital gains taxes (either short or long term depending on whether you held for <1 year of >1 year). There's a bunch of companies online that will help you calculate this, I use CoinTracker but you can google and find a company that is suitable for your needs. Most of these will import CSV files from your exchange (coinbase, binance.us, geminin etc) and calculate the cap gains for you.

You can also do it yourself, open a spreadsheet and record all your transactions. This is what the IRS needs:
Service (coinbase)
Asset Name (BTC)
Date of purchase (4/1/2021)
Cost Basis ($130.99)(how much you spent total including fees)
Date of sale (8/22/2021)
Proceeds of sale ($149.23)

At the end of the year, you can plug this into Turbotax or give it to your accountant

2. Any crypto that you receive from an airdrop, faucet, coinbase earn (those $3 giveaways you get from different coins for answering a few questions), referral/sign-on bonuses and most importantly MINING (or staking): you have to pay income taxes on this for the year you received it

For example, let's say you're mining ETH (for whatever time is left that you can actually mine ETH), every time you receive crypto from mining, you have to record the date and the price of ETH at the time you received it. You will be paying income taxes for that ETH based on the dollar value at the time you mined it. The value of ETH at that time will also be your cost basis, so if you don't sell that ETH and hodl it for 10 years and then decided to sell it, you will pay cap gains on the difference between your sale price and the price at which you mined it

As far as strategies, main one is just not to sell. HODL, keep buying on dips or DCA. It's not yet time to sell BTC, remember this saying: when BTC is ready to be sold, you won't have to.

edit: typos

[Panscan]

Long time lurker, had to make an account to answer this

There's two different taxes you need to consider with crypto:

1. For any crypto you bough and then sold, you have to pay capital gains taxes (either short or long term depending on whether you held for <1 year of >1 year). There's a bunch of companies online that will help you calculate this, I use CoinTracker but you can google and find a company that is suitable for your needs. Most of these will import CSV files from your exchange (coinbase, binance.us, geminin etc) and calculate the cap gains for you.

You can also do it yourself, open a spreadsheet and record all your transactions. This is what the IRS needs:
Service (coinbase)
Asset Name (BTC)
Date of purchase (4/1/2021)
Cost Basis ($130.99)(how much you spent total including fees)
Date of sale (8/22/2021)
Proceeds of sale ($149.23)

At the end of the year, you can plug this into Turbotax or give it to your accountant

2. Any crypto that you receive from an airdrop, faucet, coinbase earn (those $3 giveaways you get from different coins for answering a few questions), referral/sign-on bonuses and most importantly MINING (or staking): you have to pay income taxes on this for the year you received it

For example, let's say you're mining ETH (for whatever time is left that you can actually mine ETH), every time you receive crypto from mining, you have to record the date and the price of ETH at the time you received it. You will be paying income taxes for that ETH based on the dollar value at the time you mined it. The value of ETH at that time will also be your cost basis, so if you don't sell that ETH and hodl it for 10 years and then decided to sell it, you will pay cap gains on the difference between your sale price and the price at which you mined it

As far as strategies, main one is just not to sell. HODL, keep buying on dips or DCA. It's not yet time to sell BTC, remember this saying: when BTC is ready to be sold, you won't have to.

edit: typos

This is going to be nearly impossible for me. I get random crap deposited all the time that is essentially worthless. As someone who participates in the NFT world, it is going to be a complete and total mess. From a book-keeping aspect alone this is going to be so complex and I'm really not looking forward to it.

[jacoavlu]

This is going to be nearly impossible for me. I get random crap deposited all the time that is essentially worthless. As someone who participates in the NFT world, it is going to be a complete and total mess. From a book-keeping aspect alone this is going to be so complex and I'm really not looking forward to it.

hahahaha. sorry my friend