Let’s simulate tax consequences of HODL vs. Trading. Assumption: on average, a trader will merely break even in Bitcoin terms. This is equivalent to periodically selling all bitcoins and buying them back at the same price, but having to pay tax on the gains and hence buying back fewer bitcoins.

I also assume the trader sells every time he 10x’s the dollar value of his bitcoin holdings. I assume all gains are long term gains, where tax rate is 10% for most people or 28% for high income people.

Long story short: such “mediocre” trading, despite such amazing returns, could cost you somewhere between slightly less than half your bitcoin and 85% of it, if you traded from bitcoin prices of $1 to $100,000. But the trader does pay less in tax…cause he has a shit ton less value at the end.

See attached spreadsheet images.