Understanding the 80% Cryptocurrency Tax Implications

A quick, decision-ready rundown

Question

Can I avoid paying any taxes on my Cryptocurrency investments?

No, it’s generally not possible to completely avoid paying taxes on cryptocurrency investments. Most countries require reporting gains from crypto transactions as capital gains or income, though there may be strategies to minimize your tax liability through diversification or loss carry-forwards.

I’ve lost some coins due to hacking or theft – how does this affect my taxes?

If you’ve lost coins through theft or other forms of loss, these may be deductible as a capital loss on your tax return. You’ll need to provide proof of the loss and follow specific reporting procedures outlined by your local tax authority.

Risk management you can actually use

• Risk per trade = account equity × risk% (e.g., 1%).
• Position size = risk per trade ÷ (entry − stop).
• Expectancy (E) = win_rate × avg_win − (1−win_rate) × avg_loss.
• Cap total portfolio risk; journal every trade.

A quick example

Account $10,000, risk 1% → $100 risk per trade. Entry $50, stop $48 → $2 risk/share → 50 shares. Target $54 (2R). If stopped, −$100; if target hits, +$200 (before costs).

How much capital do I need to start?

Use an amount you can afford to lose while learning a repeatable process.

How do I size positions?

Decide a fixed risk % per trade, then divide by the price distance to your stop.

How often should I review?

Match your timeframe: DAIly/weekly for swing; weekly/monthly for long-term.

What goes into my journal?

Thesis, entry/exit, risk (R), emotions, result, next improvement.

Sources & Signals (add before publish)

• Earnings or guidance: …
• Macro data or policy: …
• Sector flows: …
• Unusual volume/price action: …