BigONE Strategy: 65% of people made this mistake after investing in cryptocurrencies
The cryptocurrency market is growing. According to a data study conducted by related institutions, more than 100 million people worldwide may become cryptocurrency holders by next year. At present, most investors purchase cryptocurrencies as a means of investment, with more than 60% of individuals who own or have owned cryptocurrency stating that it is for investment purposes.
Although there is an increasing number of investors who hold cryptocurrencies, a large number of people have made a serious mistake by holding them for a short period of time and selling them too soon. According to relevant data, nearly 65% of investors who own cryptocurrencies sell them within a year of purchasing them, and more than 50% of investors sell them within six months. According to BigONE, it makes sense to hold cryptocurrencies for less than a year under certain special circumstances. However, according to historical data, holding cryptocurrencies for a long period of time usually results in higher profits for investors.
Although most investors consider cryptocurrency an investment method, BigONE believes they did not employ the best investment strategy during the investment process. Long-term investments can withstand the test of time in all investment fields. Investors should hold cryptocurrencies that they believe will continue to rise for at least 2–3 years after purchasing them, as this is the most effective way to generate the most benefits. Consider the earnings of Bitcoin and Ethereum over the last three years: Bitcoin’s price increased by more than 1700%, from $3,700 in 2019 to $64,000 in 2021. The price of Ethereum increased by more than 3200%, from $133 in 2019 to $4,300 in 2021.
Suppose you own these two cryptocurrencies and have held them for more than two years. You can make money if you buy any of these cryptocurrencies and sell them within a year, but you will make more if you hold them for a longer period of time. Congratulations on your financial freedom.
BigONE hopes to demonstrate the benefits of long-term cryptocurrency holding through real-world examples, but we cannot guarantee that all investors will profit from long-term cryptocurrency holding. Because cryptocurrencies, like all investments, are risky and subject to large fluctuations as a result of external factors. BigONE believes that long-term cryptocurrency holding will increase your chances of success. In contrast, short-term investment is much more difficult because success depends on entering at the right time. BigONE cannot predict price trends, so investors can only be advised to watch and understand the market and learn and study more.
BigONE is a cryptocurrency exchange. Like stock exchanges, our main source of income is the fees charged by investors when trading cryptocurrencies. If investors choose to hold cryptocurrencies for a long time, they will inevitably reduce the frequency of transactions. As a cryptocurrency exchange, our income will also decrease. Even so, BigONE also recommends that investors hold cryptocurrencies for a long time under normal circumstances. If investors frequently trade cryptocurrencies within a year, this will incur some additional costs. Of these additional costs, the handling fee accounts for a small portion. The biggest one is short-term capital gains tax.
Take the United States as an example. Whenever an investor makes a profit by trading cryptocurrency, the amount earned is capital gains. The IRS will require investors to report capital gains and pay taxes for them. Investors need to pay short-term or long-term capital gains taxes. It depends on whether you hold cryptocurrency for more than a year.
Capital gains refer to the gains from the sale of stocks, cryptocurrencies, artworks, antique cars, gold, and other assets. When investors buy cryptocurrencies, hold them for a period of time and sell them for profit, the US government will treat this part of the gains as taxable income. Once you sell the cryptocurrency, you get the “realized gains,” which are capital gains; if you only hold and do not sell, you get the “unrealized gains.”
Capital gains tax is divided into short-term capital gains tax and long-term capital gains tax. The capital gains tax rate for holding cryptocurrency for one year or less is equivalent to the salary income tax rate. The US IRS (Internal Revenue Service) currently sets the maximum capital gains tax rate for investment products held for more than one year at 20%, far lower than the 37% maximum marginal tax rate for salary income.
If the investor keeps the cryptocurrency for more than a year, the tax paid when the selling will be reduced because the gain will be considered a long-term capital gain. According to relevant data, the number of investors who sold cryptocurrency after holding it for less than a year accounted for 65 percent of the total number of investors in the network, implying that 65 percent of cryptocurrency investors paid higher capital gains tax. BigONE is forced to admit that selling cryptocurrency within a year is not always a bad idea. Selling is the right decision in some circumstances, such as when the market fluctuates sharply, and the currency price drops. Aside from these rare exceptions, the most effective strategy for cryptocurrency investors is to hold for a long period of time.
That’s why BigONE would rather reduce its own income and remind investors to hold cryptocurrencies for a long time. Since its establishment, BigONE has always been thinking from the investor’s perspective. BigONE hopes to assist investors in maximizing investment benefits through its own efforts.
BigONE, more than asset security.
About BigONE
BigONE is a global cryptocurrency exchange that provides a platform for trading various cryptocurrencies. It was founded in 2017 and registered in the Netherlands. The group operates in Russia, Brazil, Vietnam, Seychelles, Singapore, Japan, and Indonesia, providing marketing, investment, and blockchain technology research & development.
