Our weekly crypto newsletter is here! Read more about Portugal’s future as a crypto tax haven and the record spike in VC investments in the blockchain industry! We also have two trading tips for you!
Will Portugal remain a crypto tax haven?
The previous tax exemption for private individuals could soon be over in Portugal. According to the latest developments, the government plans to make cryptocurrencies subject to tax capital gains. Whether and how income from staking or yield farming will be taxed is not entirely clear yet.
Emigrating with cryptocurrencies
Although moving to a country with very low or no crypto tax might seem very attractive at first glance, you should clarify beforehand to what extent (if at all) the tax liability for the cryptocurrencies held changes. Otherwise, you may still be liable for tax in your initial country. On the one hand, exit taxation may result in book profits being taxed upon relocation, which means that a fictitious sale is assumed at the time of relocation. In addition, depending on where one emigrates to, the actual sale might be taxed again in the new country.
As if this wasn’t enough, one must also consider the extended unlimited tax liability. Namely, several factors must apply for this. One aspect is moving to a country with lower taxation than the initial one (e.g. Germany), whereby income for ten years without a clear foreign connection is also subject to extended limited tax liability in Germany. Whether this is applicable in individual cases is best clarified with a specialist in international tax law before moving.
An additional tip from our DACH-region crypto tax expert, Erik:
If you live in Germany and need help with tax-related questions, your local responsible tax office offers you the possibility of binding or non-binding information. The tax office must adhere to the binding information, which you might have to pay for depending on the effort involved. The non-binding information, on the other hand, is free of charge, not legally binding, and does not have to be answered, but it should give you an approximate direction.
Record Growth for Blockchain funding
Headlines on the implosion of LUNA and UST possibly overshadowed the latest report by CB Insights, which gives a bigger picture of where the whole blockchain industry might be headed. According to the report, the global venture capital that went into crypto and blockchain start-ups has increased for the 7th consecutive quarter in a row and reached a new record level of $9.2 billion.
A total of 461 deals have been made in Q1 2022 – an increase of 15% quarter-over-quarter and 84% year-over-year, or an average of seven deals per workday. Of those deals, a staggering 80% were for early-stage businesses, which is the same percentage as in 2021 and could indicate that the industry has not reached its mature phase yet. Comparing countries shows that the US leads the pack by collecting more than $5 billion for the second quarter in a row, which is more than half of all global funding.
Crypto Trading Tip: Bollinger Bands
We’ve seen some turbulent action lately across both the traditional and crypto markets. If you believe that technical analysis can give you valuable insights regarding future price action, it’s probably a good idea to check out the Bollinger Bands indicator. You may have already seen Bollinger Bands, a popular indicator, throughout your crypto journey without even realizing that’s their name.
Bollinger Bands was developed back in the 1980s by John Bollinger, and they consist of a moving average wavy line displayed along with upper and lower “bands.” According to many traders, the Bollinger Bands indicator is a great way to determine whether a certain asset is currently overbought or oversold. The general concept is quite simple – the closer the prices move to the upper band, the more overbought the market, and the closer the prices move to the lower band, the more oversold the market.
Read more about Bollinger Bands in this article on our blog!
Welcome to investing: Don’t invest more than you can afford to lose
There is no doubt that these two weeks have been brutal for crypto – Bitcoin went down 26%, Ethereum 32%, and Solana 50% during last week. We won’t even go deep into Terra Luna which went down from $81 to around $.0001 as of the time of this writing.
So is this bottom, or what’s next? When you consider other macroeconomic factors, such as inflation, interest rate increases, and regulatory risk, the only thing that’s certain in this market is that no one can be sure where the crypto market is headed. After the last bull run, many crypto newcomers have yet to experience a bear market or the pain of -90% to their portfolio. As such, recency bias may lead them to take excessive risks.
Sure, when things are good, buying crypto on credit or mortgaging your house to go long seems like a win-win, but investing in markets isn’t easy, and you can never tell which way the price of assets is moving. Therefore, managing your risk should be your number one priority when investing in crypto. Remember the golden rule, do not invest more than you can afford to lose. In the meantime, harvest your tax losses using our Trading Tax Optimizer!
Try the Trading Tax Optimizer for free on this link!