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Long-term Cryptocurrency Investing

May 8, 2018 Blog

If you are thinking about investing in Bitcoin, it’s helpful to get legal advice about the implications of this investment. A Bitcoin attorney provides guidance, including advice on how these assets should be treated for tax purposes.

One issue that affects the decisions investors make — and the ways in which investments are taxed– is how long investors intend to hold onto their investments.  Surprisingly, a new study showed that many cryptocurrency investors intend to hold onto their virtual currency investments for a very long time, rather than just chasing short-term gains.

Many Cryptocurrency Investors are Long-Term Investors

A recent survey of 2,500 users of a virtual currency trading platform revealed that just 27 percent of investors are putting their money into virtual currencies with the hopes of making short-term gains. Of those investors, 13.1 percent purchased the coin for investment purposes while others were focused on earning money for goals including marriage and the purchase of property.  However, 42.8 percent of investors intended to hold their invested funds over a long period of time.

Investors over the age of 50 were found to be the most likely to intend to hold their virtual currency investment as a long-term investment. By comparison, only around 30 percent of coin investors who were in their 20’s indicated they plan to use their coin investments as a long-term investment that they hold onto potentially for decades.

Almost 40 percent of investors also indicated that they would continue to maintain their investment in cryptocurrencies despite having to pay capital gains on profits. This is an 11 percent increase compared with the prior year in the number of investors who said they would not want to continue investing in cryptocurrencies due to capital gains tax requirements.

These survey results reportedly fall broadly in step with general sentiments of investors in the cryptocurrency market. Investor sentiment seems to show hat Bitcoin and other altcoins are currently in the buy stage but are moving into the hold phase.

Holding virtual currencies as long-term investments is starting to make more sense as the cryptocurrency marketplace is maturing, the perception of these investments is becoming more positive, and more industrialized countries have begun to recognize virtual currencies as a major asset.

These industrialized countries have also begun to increasingly regulate the trading of these virtual currencies.  Increased regulation is actually seen as a major positive sign by many investors in digital coins, and regulation is projected to become a boon for future growth as investing in cryptocurrencies becomes safer and thus more mainstream.

Whether you are an investor who plans to buy and hold cryptocurrencies or you plan to sell your coins quickly if you make a profit, it is important to understand U.S. tax rules and other rules and regulations related to your investment. A Bitcoin attorney can provide you with advice and insight on the current rules regulating cryptocurrency investing and can also offer advice on any changes to regulations that occur as the SEC develops a new cryptocurrency division to deal with what has become a multi-billion dollar trading marketplace for virtual currencies.