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What to Do if You Suddenly Acquire a Significant Amount of Bitcoin

By Evan Jones03/08/2024

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Though you may have heard of the millions of Bitcoins that have been lost due to someone throwing out an old harddrive, forgetting a password, or losing a device, there are also cases where people suddenly find and/or realize that they have a Bitcoin or some amount of Bitcoin in an old wallet or on an old harddrive. 

In this guide, we’re going to go over a crash course on the options you have if this sort of thing happens to you, and also answer some common questions that may come up as a result.

Main Options

Below we’re going to discuss your main options should you be lucky enough to find some amount of Bitcoin that you didn’t know you had.

Sell

Depending on your financial situation at the time you find this lost Bitcoin, you may choose to sell it all. It’s really not a bad option considering you didn’t even know you had it, and getting a windfall of cash isn’t ever a bad thing. You can take that cash and use it for whatever you want, whether another investment, paying off debt, or whatever else. 

However, if you look at Bitcoin’s price performance over time, you may find one of the other options on this list to be better for your long-term financial goals. Your level of risk aversion will play a large role in what you decide to do with Bitcoin and other digital asset investments. 

Keep in mind there’s also a good chance there will be tax implications depending on your income and country of residence.

Sell Half

You want some cash now but you also have some confidence that the price of Bitcoin is going to continue to go up over time, so you can choose to sell half of what you found. This is a great option especially if you are a slightly risk averse person, as you can take out some cash but also get the potential for more return in the future.

Whether selling half or selling all, there will be tax implications, which we’ll get to later on. 

Swap for Altcoins

You could instead choose to trade your Bitcoin for Ethereum, Solana, USDT, or any other digital asset on the market. You wouldn’t have to swap all of it, much like with selling half you could essentially diversify into another crypto asset but hold a position in Bitcoin. You certainly could swap the entirety if you wanted though. 

Swapping for altcoins carries a decent amount of risk as Bitcoin is considered the most stable asset in a volatile crypto market. A significant number of altcoins have trended to zero over time.

Again, a swap will have tax implications which we’ll get to. 

Hold

The final option we’re going to discuss is just holding onto Bitcoin, which is perfectly reasonable if you have confidence in its long-term outlook. You could hold it just in a wallet until you’re ready to sell, or you could even deposit it into a decentralized lending platform in order to earn a small return or take out loans against it. There are many options available if you just hold Bitcoin and there are no tax implications for just holding it either.

Common Questions

How Much Is It Worth?

This depends on the amount of Bitcoin found in the wallet. Simply multiply the amount by the current price of Bitcoin to figure out how much it’s worth in USD.

The majority of Bitcoin’s price appreciation occurred after 2017. So if the Bitcoin you found pre-dates 2017, it could potentially be worth a huge amount. Obviously that’s entirely dependent on the amount of Bitcoin.

How Do I Sell It?

In order to sell your Bitcoin, you’ll need to sign up for something like a cryptocurrency exchange (Binance, Coinbase, Kraken, etc), or payment gateway like MoonPay and have your identity verified. You can then sell your Bitcoin for USD, or another digital asset like Ethereum. 

If you sold it for USD you can then withdraw it to a bank account, whereas if you sold it for another crypto asset you can leave it on the exchange or withdraw it to your own crypto wallet.  

Do I Owe Taxes?

Yes, if you sell the found Bitcoin, or trade it for another crypto asset, you owe taxes. The amount you owe would depend on the price the Bitcoin was originally bought/received at. If you’re unable to determine that, you will have to use your best judgment when reporting the capital gains on your taxes. 

You won’t owe any taxes if you just hold the Bitcoin.

How Can I Hedge My Crypto Investment?

The main way to hedge your crypto investment is to keep a portion of profits in a stablecoin such as USDT or USDC. This way, if the crypto market does go down when you’re expecting it to go up, you can either buy more at a lower price, or just be comfortable that the stablecoin has a stable value. 

You can do this at a larger scale, such as putting the entirety into a stablecoin when you aren’t confident in the market and then buy back in when you are. 

Is Crypto Still a Thing?

Yes, crypto is still certainly a thing. Bitcoin’s market cap is approaching $1.5 trillion and the overall crypto market is getting close to $3 trillion at the time of writing. There are also billions in trading value happening every day across crypto markets. 

Closing Thoughts

There are a lot of good options for you if you‘re lucky enough to find Bitcoin you didn’t know you had. Each option’s value depends on your personal situation, risk tolerance, and outlook on Bitcoin and digital assets.

Though there are still those that think Bitcoin and crypto could go to zero, that seems less and less likely as things like spot Bitcoin ETFs have been approved and assets continue to recover from the lows of 2022. 

Article tags

Beginner
bitcoin
guide
Evan Jones

Author

Evan entered the crypto scene in 2017, attracted to the many disruptive possibilities that blockchain could have on current world systems. He has a keen interest in decentralized services, payment processing, and viable NFT use cases such as event ticketing. He spends his days writing with his dog Kobe under his feet, if not on his lap.

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