How to Turn Tax Payments Into More Crypto

Most crypto investors treat capital gains tax like a nightmare, something to be avoided at all costs. But what if I told you that paying taxes—if done strategically—can actually help you accumulate more Bitcoin? The reality is, many investors let the fear of taxes keep them from making the smartest financial decisions.

Instead of clinging to a HODL-only strategy, what if you took profits at the right time, reinvested at market lows, and multiplied your holdings—despite paying taxes? Let’s break this down step by step.

Step 1 – Holding Through a Bear Market Is Far More Expensive Than Paying Taxes

Most investors assume selling means losing out because of taxes. But when you run the actual numbers, the opposite is true.

Imagine you invested $100,000 into Bitcoin in early 2017, when BTC was $1,000 per coin. That would have bought you 100 BTC.

Scenario 1: HODLing

• You never sell and ride the entire market cycle, holding onto 100 BTC through bull and bear markets.

• At today’s price of $100,000 per BTC, your portfolio is worth $10 million.

Scenario 2: Selling Near the Peak & Rebuying Lower

• You sell 100 BTC during the late-2017 peak at $19,000 per BTC, netting $1.9 million.

• You pay 20% capital gains tax (~$360K), leaving you with $1.54 million.

• You reinvest in March 2020, when BTC crashes to $3,600 per coin, buying 427 BTC.

• At today’s price of $100,000 per BTC, your portfolio is worth $42.7 million.

The Difference?

• BTC Holdings: The profit-taking strategy left you with 427 BTC, while HODLing kept you at 100 BTC.

• Final Portfolio Value: $42.7M vs. $10M → a 327% increase in value by selling high and rebuying low.

The Lesson?

HODLing through a bear market costs you far more than taxes ever could. By strategically taking profits and reentering at the right time, you can multiply your Bitcoin holdings—despite paying taxes.

Step 2 – I Had to Make This Decision Myself, Here’s What Happened

I had to apply this strategy in real life recently, but not in the way you might expect.

I was in the market for a new car, and I wasn’t sure which financial route made the most sense. Should I:

• Borrow against my assets? (Leverage my crypto without selling)

• Use a 0% interest credit card? (Free financing but increased liability)

• Pay in cash? (Easiest, but loses opportunity cost)

• Sell crypto and take the tax hit?

On the surface, selling crypto seemed like the worst option. But after talking with my accountant, we realized that it was actually the most efficient financial decision.

Why? Because by taking profits and paying the tax, I was still left with a strong cash position—AND I positioned myself to reaccumulate at a better price later.

What If You Have Nothing to Buy?

A common question I hear is: What if I take profits, but I don’t need to buy anything right now?

Simple: You should always have something to buy. And if you’re in the crypto space, your best option is often... more crypto.

Instead of HODLing blindly, you could:

✔ Sell at market peaks, pay your tax, and accumulate more of the crypto during bear markets.

✔ Use profits to diversify into assets that generate cash flow.

✔ Keep some capital liquid so you can pounce on opportunities.

Smart investing isn’t about attachment to an asset—it’s about knowing when to extract value and redeploy.

Step 3 – If You Want to Apply This, Here’s a Simple Plan to Follow

If you want to use this strategy for yourself, here’s a straightforward plan to follow:

1️⃣ Take Profits Strategically

• Never exit all at once. Instead, ladder out near market peaks.

• Set clear profit-taking targets with an actual plan - like the BlockFlow Methodology Wink Wink

• The goal is to lock in gains while the market is euphoric.

2️⃣ Allocate for Taxes & Keep Cash Ready

• Calculate your capital gains tax liability in advance.

• Set aside tax funds immediately so you’re never caught off guard.

• Keep additional cash ready to reenter when prices drop.

3️⃣ Reenter During Market Corrections

• Ladder back into the market when the crypto drops significantly.

• Use major corrections (40–80% drawdowns) to accumulate more crypto.

• Patience is key: bear markets are when you make your next fortune.

Final Thoughts: Stop Letting Taxes Scare You

Many investors fear paying taxes, but the numbers prove that avoiding tax can cost far more in lost opportunity.

By taking profits at the right time, paying taxes, and rebuying lower, you multiply your holdings over time—often by several hundred percent.

Would you rather:

✔ Hold 100 BTC and be worth $10M today?

✔ OR take profits and own 427 BTC, worth $42.7M today?

The choice is yours.