As readers of this blog probably already know, I focus my investing on index investment options available in Canada, such as TD e-Series funds, and ETFs through Questrade. Those options are fairly safe, not very exciting, and don’t involve a ton of work. A few years ago, I decided to start doing some “fun” investing with a small chunk of money. I was quite interested in the technologies behind Bitcoin and other cryptocurrencies, so I bought a Ledger wallet, and began buying some Bitcoin as well as other cryptos. Lately, I’ve decided to end my investment, and cash out and move my money elsewhere. Let’s take a look at my journey, and why I’ve decided to sell my Bitcoin and other cryptocurrencies.
My start with Bitcoin
I had been following the story of Bitcoin for many years, and thought about getting involved many times. In 2015 I watched a Bitcoin documentary about it and thought about making some purchases, with a plan of dollar cost averaging over a few months. Unfortunately, at that time it seemed like there was too many barriers to enter the market, and I didn’t buy any. My portfolio and profit would look much different now if I had.
Fast forward 2 years, and at a family dinner in October 2017, my brother told me about some purchases of Bitcoin he had made, and the process he had followed to do it. After talking a bit more, I decided it was time, and to enter the world of Bitcoin.
Original cash contributions and methods.
I did some more research, bought a cryptocurrency wallet (a Ledger Nano S, which I still do very much recommend to anyone wanting to get into cryptocurrency), and signed up for what is now a defunct cryptocurrency exchange (read more about that below). I purchased $1,000 (CAD) of Bitcoin and transferred it to my new wallet. The excitement at this time, along with massive gains in jsut a couple of days led me to contribute another $750 in cash a few days later, and diversified that amount into a few other major cryptocurrencies (Etherium and Litecoin). The ups and downs (but mainly ups at that time in 2017) were addictive, and I was hooked on buying and selling cryptocurrency.
October 2017 Cryptocurrency Value
- Book Value: $1,750
- Market Value: $1,750
More diversification of coins and additional cash
Reading more about different cryptocurrencies on reddit, over the next few weeks, I diversified some more in NEO and Vertcoin. Prices were still rising, and I was interested in the differences in the coins. At this point I was holding a majority of my assets in Bitcoin, with varying amounts in the other four coins. It was now early November 2017 and the value of all coins was still rising. I added another $300 worth of cash, making my total book value at this point $2,050 and as of December 1, 2017 the market value of my cryptocurrency was $2,913 CAD, a 42% increase in one and a half months!
December 2017 Cryptocurrency Value
- Book Value: $2,050
- Market Value: $2,913
As the graph above alludes to, there were going to be some major ups and downs coming my way.
All Time Highs
Only a few months in and things were looking too good to be true (which of course they were). Every morning I would check my balance and see that it had grown once again. This all culminated with an all time high on January 15, 2018, where the value of my account was $9,476, and I had only put in $2,050 a 362% increase in only a few months. During these few months, I diversified into more coins, and made a few other balancing trades here and there
This would have been a great time to sell my Bitcoin, and a smarter person would have cashed out, but I kept rolling with it, which would be my downfall. My general investment philosophy is to hold investments long term to see eventual profits. Bitcoin is not a regular investment, and this is not a philosophy I should have used. Someone who stays on top of their portfolio, and was able to sell off profits at this time could have made some real money. I was not one of those people.
- Book Value: $2,050
- Market Value: $9,476
Bitcoin back down to earth
The good times couldn’t last, and over the next 6 months I saw crypto values comes back down to earth. A few big drops, a few smaller recoveries, and a few more big drops. I tried to capitalize on the first big dip by putting $300 more cash into my portfolio. It didn’t help. By the end of June, my cryptocurrency portfolio first hit the red. But that wasn’t before I added my last cash infusion to my portfolio, with another $197.
June 2018 Cryptocurrency Value
- Book Value: $2,547
- Market Value: $2,358
For the next full year, I saw my portfolio stay in the red with up and downs, the worst being December 16, 2018, where my portfolio value was now $990 (with $2,547 worth of crypto purchases). I decided at this point that I would ride it out, to see it either go to $0, or explode back up. I didn’t see it hit positive value again for many months, until June 2019.
December 2018 Cryptocurrency Value
- Book Value: $2,547
- Market Value: $990
Up to the present
Luckily, I waited it out, and it did rise back up. I didn’t make many trades during this time but I did consolidate some of my different cryptocurrencies. I moved back to a portfolio that mainly consisted of Bitcoin, with some NEO, Litecoin and Etherium.
Over many more months, Bitcoin stayed fairly flat. Since rising back up to positive in June 2019, it has fluctuated between gains and losses, my portfolio not straying to far from the $2,547 value either way. That brings us to today, where it sits in the positive but not by much
- Book Value: $2,547
- Market Value: $2,729
Bitcoin and Crypto Overall Performance
So at this point, after two and a half years, my crypto has profited me $168 on a $2,547 investment. This could change drastically in the next day or two, if I were to see a big one day gain or decrease, which happens fairly regularly. A 6.5% increase over that time isn’t bad on the investment, but isn’t great and not worth the volatility of the asset.
This overview didn’t get into the nitty gritty of all of the trades I made, all of the different cryptocurrencies I ended up holding. Someone else might have had a much different valuation depending on how and when they made trades.
Why I plan to sell my Bitcoin and other cryptocurrencies
After sitting through all of the ups and downs of the last few years, I’ve started to realize that holding Bitcoin as an investment just isn’t for me. There are a few major reasons that I’ve decided to exit the space
Doesn’t align with my investing philosophies
Cryptocurrency was my fun investment money. I liked the technologies, the openness of the markets, and the ease of tracking and watching my purchases. It was a very small amount of my overall investment portfolio, and would be OK if it ended up losing all of it’s value. But over time, I came to understand that Bitcoin does not align with my passive index investing philosophies, and that is one of the main reasons I haven’t been able to profit off of it. I don’t really like to day trade, and I don’t really like to guess what an investment is going to do, one day to the next. Investing in something, and leaving it to grow suits me much better, so why fight it?
Shady Canadian Bitcoin Exchanges
In my early days, I did a lot of research about which cryptocurrency exchanges I should use to get my Canadian cash into the crypto market. Two of the exchanges that I used that seemed to have positive reviews and seemed above board, ended up closing down suddenly, with many people losing a lot of money (luckily I wasn’t one of them). The murkiness of the business practices related to Bitcoin always makes me a little wary. I think crypto is heading in the right direction, and with the right business practices and regulations, we can avoid future QuadrigaCX’s and EZBTC’s, but at this point, I still have a fear that an exchange could close up while in the middle of doing business.
But with enough research, and mostly keeping your crypto in your own hardware wallet, you can successfully use Canadian Bitcoin exchanges. I plan to use Shakepay when I sell my Bitcoin.
Cryptocurrency and investment taxes in Canada when I sell Bitcoin
During this time investing in Bitcoin, I’ve always wanted to keep everything above board. I’ve tracked almost all of my trades, and plan to pay taxes on any profits that I make. That being said, it’s about as clear as mud as how to properly file taxes on Bitcoin profits in Canada. I’ve heard multiple things, including having to file every trade you make with the profit that was incurred with each crypto to crypto transaction. Even with my trade records, this seems like a lot of work to calculate everything properly.
I’ll likely overpay my taxes to make sure it all works out correctly, but I’d be a bit more worried if I had made any serious profits.
More research and talking to tax accountants could provide a solution to this, but for me, that’s not a job I want to undertake.
How to sell Bitcoin in Canada
Check back soon for a more in-depth guide on how to sell Bitcoin in Canada if you are also interested in exiting the cryptocurrency market. I’ve talked about the fear of shady exchanges, but one that I have seen be consistently praised is Shakepay. The next guide will show you step-by-step, how to sell your cryptocurrencies on Shakepay (or how to buy, if you are looking to enter the market).