I just sold all my Bitcoin (+ are UK CGT rates about to go up?)!

I have held a small amount of crypto via Coinbase for many years. 

I originally started a Coinbase account because some of my users wanted to make a donation in crypto in gratitude for my free RMPrepUSB and Easy2Boot software.

Donations were usually quite small, but over a period of a few years, it probably added up to about £100. I experimented with this as it grew in value and bought £600 Ethereum. A few years ago, I then converted it all back into Bitcoin and this week I decided to cash it all it for about £1200. I am just not convinced Bitcoin or crypto is going anywhere - after all it has had plenty of opportunity. Stablecoins are another offshoot, but the infrastructure costs of maintaining a global blockchain and transaction costs don't seem to live up to the promises. If they did, then the finance companies would be adopting crypto like crazy.

Cashing in my Bitcoin means I have crystallised a taxable capital gain of approx. £600. The Coinbase fee for the conversion to cash and withdrawal was over £20. So much for crypto transactions being cheap (1.66%)!

What to buy with £1200?

This leaves me with the problem of what to buy with the 'free' money.

I was thinking it might be nice to invest it in crypto ETFs or Finance ETFs since it came from there.

There is not really a UK alternative to the US IBIT ETF, but there are some ETFs which hold crypto companies. I picked DAGB and BKCG for these. Of course, there is the single company Strategy for Bitcoin, but this is too risky for me.

I also picked a few Finance ETFs because I reasoned that these companies will also be into crypto, but only if they can make a safe buck out of it, and secondly, taxes and the cost of living is rising everywhere. More people will be in debt and borrowing, and governments will be spending tax payers money on defense while the US is pouring tax payers money (raised by tariffs) into local US companies.

If there is anything I have learned in the last 20 years - it is to always watch where the government spends our money. Since it is not their personal money, politicians and gov. officials don't care too much how efficiently it is spent, as long as a good piece of it eventually gets into their pockets (funny how certain stocks go up just before gov deals are announced and how after leaving office, MPs and gov officials magically find consultancy jobs with the same companies that benefited from previous gov. support)!

So, I also added BNKE (an amazing good EU Bank ETF), IUFS (US S&P 500 Banks) and XWFS (World Financials ETF) to my choices. It is interesting to note that XWFS has outperformed IUFS over 1, 3 and 5 years!

I already hold DAGB, IUFS and BNKE. I no longer hold XWFS despite intending to buy it in favour of IUFS (I must have sold it at some point!). Due to the dollar exchange rate potentially improving, and the US banks having less regulation thanks to Trump however, I think that I will hold onto IUFS for a while still.

Crypto/Blockchain seems extremely volatile. Over 6 months, 1, 3 and 5 years, BNKE has easily beaten these two crypto ETFs as well as IUFS and XWFS!

So, the safest ETF for the long term would be XWFS. The best performer has been BNKE but will that continue if investors start to move back into the USA? On the other hand, if some sort of truce or peace does come about with Ukraine, will investment flood into Europe or will EU defense company stocks (Rheinmetall, BAE, Leonardo, etc.) suffer a correction?

I think, for now, I will hold off any decision. The next few weeks could see even more changes.

Will UK Capital Gains Tax (CGT) rates rise again?

Last year, the UK gov raised CGT rates to 18% for lower rate income tax payers and 24% for higher rate payers. This meant that selling shares after October 31st 2024 cost 8% more for lower rate or 4% for higher rate tax payers.

Funny how lower rate income tax payers will pay 2% less than their income tax rate (18% vs 20%), but higher rate tax payers will pay at least 16% less (24% vs 40/45%). Why would a Labour government want to penalise the humble worker more than the wealthy?

There are rumours that the CGT rate may be raised yet again by the lovely Rachel Reeves in the UK autumn budget. The income tax rate for UK Higher earners is 40%/45% while the CGT rate is 'only'  24%. This means that for higher rate tax payers, it may be worth crystallising gains within their GIA accounts before the end of October 2025 to avoid possible CGT rate increases. Many regret not doing this last year!

Due to the income tax thresholds staying the same until 2028 (fiscal drag), many people (including those retired on state+private pensions) find themselves in the higher income tax bracket. This means paying 40% on any gross income over £50k and paying the higher rate CGT (whatever that will be after 2025) on share gains over £3k/yr. It is no wonder that older, highly qualified and experienced professionals (doctors, lawyers, Civil Servants, etc.) feel that it is just not worth working overtime or even fulltime - no wonder so many are retiring and enjoying their Defined Benefit pensions (many paid for by us), instead of contributing to the economy.

A very uncertain future?

It is very hard to know what is going to happen in the next year or two. The UK government seems hell bent on taxing the UK people into submission (Labour will be gone in 3 years and they will have healthy pensions and find highly lucrative jobs elsewhere or write a book or work for a newspaper, so they don't really care). We have over 1 million illegal immigrants in this country (most of whom are not allowed to work - yet we are short of workers and tax payers).

The world powers seem quite happy for Ukraine and Russia to bomb each other and for millions of people in Gaza to starve to death. The President of America and his family/associates can make $Billions from selling worthless meme coins in the hope of influencing USA policy and no one does anything about it even though it is blatantly wrong. The same president seems to overtly threaten certain people with a withdrawal of government funds or sacking them unless they do what he wants - we call this blackmail and extortion which is illegal in the UK - but seemingly not illegal in the USA?

So, it seems to me that for different reasons, both the UK economy and the US economy are not particularly stable - the first is trying to squeeze blood out of a stone, the second is ruled by a greedy and immoral dictator. Perhaps the bureaucratic EU is more stable or should we just bet on the global world markets as a whole?

As far as I can see, the only thing to do is to spread my investments out across US, EU, UK and world ETFs and just expect lower returns for the next few years. This makes it even more important to protect my portfolio from losses by not taking too many risks. This won't stop me from dabbling just a little in higher risk companies like PLTR or SOFI though ;-).

Will my decision to sell all my Bitcoin turn out to be a mistake? Should I have sold my portfolio and bought gold (e.g. SGLN)? We will soon see...