I pay my taxes in Germany, this greatly impacts my strategy in crypto.

Germany is very special in terms of crypto taxes.

If you hold your coin longer than one year it’s TAX FREE.

If you hold it shorter than one year you pay your income taxes on profit, which is for well earning people 45%.

So what does this mean for me.

Let’s assume a scenario where coin A is priced at 1$ initially, then goes to 10$ within 2 months, retraces 40% down to 6$ and after one year it’s trading at 25$.

*Scenario A - Selling within a year*

I buy 2000 coins of coin A at a price of 1$.
It was a good decision and the price does a 10x in 2 months.
Coin A price is now 10$.
As the coin seems hyped a lot and chart looks toppy I sell to buy back again lower eventually or to cash out.

Profit: 20k$ - 2k$ = 18k$
Taxes: 0.45 x 18k$ = 8k$
Profit after taxes = 10k$

If I plan to buy back coin A as I think it can go higher again in the future this only makes sense as soon as I can buy more than the 2000 initial coins with the 10k$ I have left after taxes.

So this means price of coin A needs to go below 5$ again to buy more than my initial, as it didnt in this scenario I‘m out of this long term trade.

So I just cash out and be happy with the profit after taxes.

*Scenario B - Selling after a year*

Let’s say I endure the volatility and sell after a year for 25$ each.

Profit= 50k$ - 2k$ = 48k$
Taxes = 0

And this is why on my high convictions I tend to endure volatility and don’t sell a lot at peaks even though I suspect them to be peaks.

Don’t get me wrong, I often still take some profits.
But majority for me is hodl mostly because of these tax reasons.

You might say, you’re not a tree, love somewhere else.

While this is true, with a family with children and having all of your friends and also grandparents around this is easier said then done.

Not sure is sth is more fulfilling than having your loved ones around you.