Financial Idiot 011 - (Crypto) Portfolio Insights
This Blog Post was originally distributed by the Newsletter "Financial Idiot". You can find and subscribe to it here.
DISCLAIMER: I'm an idiot and this isn't financial advice! You can lose money when investing, and you should never invest money you don't own or you can't afford to lose. I'm not responsible for your decisions!
As you are reading this, I will be sitting in the village called Wacken in the north of Germany. I will be attending the Wacken Open Air Festival, so I had to prepare this issue a little bit farther back than usual. Also, this issue is slightly different from the previous once's because I will address multiple things. I hope you still enjoy it.
First, let's get started with the changes to this Newsletter. But don't worry, it will still land in your inbox every second week. But to get more exposure, I created a Medium Publication (https://medium.com/financial-idiot). For that, I had to make a Logo which you can already find at the top of this Newsletter. Also, if you got a Medium account, please follow me there because if I reach 100 Followers, I can enrol in the Medium Partner Program and earn money from my posts. :)
The second thing to address is that I want to create a podcast from this Newsletter. The content is already written, so I "only" need to record myself and upload it. But that might have to wait a few months until this "feature" is ready. Also, I don't know how it will sound with all the numbers I've got going on sometimes.
The third thing is crypto regulations, which are finally on their way and the exciting changes coming along with them.
As you might know, the Austrian government did find a solution for cryptocurrencies, and since 2022 they are now basically treated the same as shares. But also, the EU did come to a first conclusion.
Let's talk about the EU first (https://blockpit.io/blog/eu-dac-8-richtlinie-krypto-besteuerung/). The DAC8 says that crypto gains need to be taxed. The how is every state's responsibility. For example, everything is tax-free in Germany after a year of holding. Additionally, crypto services providers (exchanges, cloud miners and others; called "Crypto-Asset-Service-Provider" or, for short: CASP) will need to tell tax offices the transactions for customers. For example, if you stake on Bitpanda, they will be obliged to transmit your gains to the tax office in Austria. So you must declare your profits at the end of a fiscal year, and European CASPs will also need to declare your stuff. The tax offices can then "easily "cross-check if you declared the correct gain ("doppelte Meldepflicht ").
That isn't as easy with crypto as with the typical "fiat "transactions. You could participate in a DAO (and earn rewards) or have some LP Pool on one of the many decentralized providers. For those gains, you will still be responsible on your own. According to the linked Blockpit Article, a decision on DAC8 is expected this November, but the effective activation could be in 2024. You have to consider that all EU states will need to implement regulations on their own based on DAC 8. Austria and Germany should be ready already, in my opinion.
I'm not a massive fan of overregulation, and I think the way Austria is going, with a similar treatment of fiat and crypto, is good. I, for my part, added my crypto gains with the start of the fiscal year 2021 to my income tax declaration and will add them from now on.
Now let's have a look at the US (https://threadreaderapp.com/thread/1546976277520740352.html). As far as I understand the linked Thread, the US decided which crypto "product "has to be regulated by which authority (SEC or CFTC), which is a huge step forward. From what I understand, they also declared how certain "products "are handled. So like the DAC8 in the EU, they are building the legal framework for crypto companies to flourish. But in contrast to the EU, they are way quicker again at implementing this, which means the US will gain an advantage in crypto just like in many other sectors.
Regulating cryptocurrencies is a crucial step in allowing mass adoption. Sure, people don't agree with everything, and I think governments will have a hard time learning that specific regulations won't be possible to execute. But the more things get regulated, the easier it will get to do KYC for crypto companies, and it will get easier for them to create a company. I'm bullish for the next bull run, which will come along eventually, and I'm looking forward to the companies that will rise with it.
And now it is finally time to address my crypto holdings. :) I talk a lot about crypto, but my total exposure isn't as extensive as one might expect. Let's dig in.
Currently, my largest holding is around 60k CRO coins from crypto.com. I am using the credit card heavily and got a bunch of rewards in the past. My investment over about three years is 3k€ now, but that value was more significant in the past. Every time I get a cashback reward or receive staking rewards, I'm lowering the buy price of my CRO holdings. With 3k€ divided by 60k CRO, my average price is now at 0,05€. The Token is currently valued at around 0,10€ to 0,15€, which already gives me a good gain. But last year, around November, the Token trended in the Top 10 at almost 0,80€. You can calculate on your own how much worth my stake back then was. :)
My second position is on Bitpanda. I created a savings plan on their BCI25 (an index of the TOP 25 cryptocurrencies). Currently, it is sitting at around 150€, and I intend to grow that position over the following years.
The third is a newly created ETH wallet. I'm buying ETH every second week on Bitpanda and transfer it regularly to the wallet. When the ETH hits the wallet, I deposit it in the Lido.fi Locking Token for ETH2.0. Again, a minor position is residing around 100€.
The fourth position is something I already mentioned in the Fiat portfolio insights. The 21 Shares HODL certificate. I'm currently holding 125 pieces with an unrealized loss of almost 1k€.
I hold around 20 Polkadot in crypto.com's earning program. But besides that, I don't have any prominent crypto positions anymore. A few years back, I had around 200 to 300 ETH I mined myself right at the beginning. Sadly I can't remember the wallet address nor the private key to it, so I'm trying to think about the value I lost there.
As I said in the beginning, at the time of the release of this Newsletter, I'm not in Austria, and I'm not exactly sure what the next one will be about. I'm currently thinking about some insights into the apps I'm using to buy stocks, cryptos and other things.