Crypto kings cash in their coins

After a massive rise, including a 50pc jump in December alone, some investors are selling their Bitcoin and spending the profits. But have they sold too soon? Sam Benstead reports

Bitcoin owners had an extra reason to celebrate the new year as the price of the cryptocurrency pushed through $30,000 (£22,000) to record highs after a 50pc jump in December alone.

Some investors took this as a cue to take profits and turn their paper gains into hard cash ready for use in the real economy, even as the price soared past $35,000.

One crypto winner is William Mann, a 36-year-old farmer from Gloucestershire. He has bought £50,000 worth of Bitcoin over the past three years and is now sitting on a £150,000 pile of “digital gold”.

“My first purchase was in 2017 when it traded at around $1,000 per coin. I was speculating on what I thought was an interesting idea. I did not think that it would realistically replace ‘fiat’ [paper] currencies or gold as a safe haven. It was just a bit of fun,” he said.

“But as I began reading more about it and investing more I picked

‘My Bitcoin profits will pay for a house extension even after capital gains tax’

up a greater appreciation for its qualities over government- backed currencies. However, it was only really speculation.”

Mr Mann’s latest purchase was last autumn at around $10,000 per coin. His timing was inspired, or fortunate, as the price has tripled since then.

Now he is beginning to cash in his profits. “I want to build an extension on my house and I paid for all this year’s Christmas presents with the money I’ve made,” he said.

Mr Mann acknowledged that he had been very lucky and said he would donate some money to NHS charities. He is also aware that he must pay capital gains tax on the money he has made.

Ben Harrison, a 23-year- old software developer who lives in Liverpool, cashed in £20,000 worth of Bitcoin to fund his relocation from the Isle of Man to the mainland.

“I’ve taken a large chunk of my Bitcoin wealth out to pay for some bigticket essentials, such as the deposit on the flat I’m renting and a new car. It is also going to help me pay my rent,” he said.

Unlike Mr Mann, Mr Harrison said he saw Bitcoin as the future of money and would never sell all his coins, arguing it was an alternative to putting money in savings accounts. He started to invest in 2018 when he paid $5,000 per coin and overall has put £40,000 into Bitcoin. The most he has ever paid is $14,000.

Thomas Hopkins, a 27- year- old legal professional in London, cashed in £750 of Bitcoin to net a £250 profit this week. A newcomer to cryptocurrency, he invested £500 last month when Bitcoin was trading at $14,000 in the hope of making a quick return after he saw that the price was rising.

“I could see the growing appeal of crypto, particularly as big investors were getting on board. However, the volatility became too much for me and I sold out for a tidy profit. I never saw Bitcoin as a real alternative to mainstream currencies,” he said.

“I’m happy with the £250 I made and will spend it on gym equipment to get me through the lockdown. In hindsight selling when I did was too soon as the price has kept going up, but I know it could fall rapidly.”

HAVE THEY SOLD TOO SOON? It is anyone’s guess where the Bitcoin price goes from here. There are three schools of thought. On the one hand, Bitcoin fanatics think there is no limit to how valuable it could become, given that its supply is finite.

Others say that while the virtual currency could lose all its value, it makes sense to own a small amount as there is also a chance it will become extremely valuable.

Ruffer, the £ 20bn British investment manager, recently added Bitcoin to its all-weather funds, saying it helped diversify portfolios and could rise in value if governments kept borrowing and interest rates stayed at rock bottom. JP Morgan, the bank, has gone from calling Bitcoin a “fraud” in 2017 to saying it could rise to $146,000 a coin.

Marcus Swanepoel of Luno, a cryptocurrency exchange said: “This turnaround and backing of Bitcoin from some of the biggest names in the business is giving the market more confidence than in previous bull runs and is in a big way responsible for the records Bitcoin is now breaking.”

The third camp says Bitcoin is inherently worthless as it is difficult to spend directly and unproven as a “safe haven” asset. Investors should steer clear, according to Felix Milton of Philip J Milton, a financial planning firm, because governments could intervene at any moment and outlaw it as a currency, making it illegal to own.

He warned that Bitcoin held on exchanges was not protected by the Financial Services Compensation Scheme, so it was not as secure as holding money in a savings account.

Mr Milton advised against investing unless Bitcoin became regulated by the Government and said prospective owners should treat it as a gamble.