Andrew Henderson

Andrew Henderson

Founder of Nomad Capitalist and the world’s most sought-after expert on global citizenship.

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Cryptocurrency • Finance

How to Successfully Respond to a Crypto Bear Market

Let’s face it, Bitcoin and most cryptocurrency markets have been in a bit of a decline lately. This is the reason why there have been so many talks about the crypto bear market.

People are debating whether this is simply the beginning of a “new loss” and if crypto will head back up. Maybe it’s also the beginning of a new “bear market cycle.”

Although, if that’s the case, then there’s one thing that we want you to be aware of.

This is something that you can use to your advantage. Plus, you ought to know that there’s always a silver lining in a down market, especially when it comes to your offshore tax strategies.

Now, we’ve been saying this for years.

We’re going to remind all the new crypto investors today on what exactly it is that you want to do when the markets are down or when you’re facing a crypto bear market. So if you’re going to wake up and log into your exchange, look at the crypto charts, and you see your cryptocurrency stocks going down, you need not freak out.

Things That You Should Consider with the Crypto Bear Market

The thing that you should consider doing when you see a moment of decline in the crypto bear market is to put together your offshore plan, look for safe offshore banks, and move overseas.

Andrew understands that this is psychologically harder. After all, he’s been through this himself.

He left the United States, and he eventually expatriated. This, then, led him to renounce his US citizenship.

Then again, he’s lived all over the world, and he knows that this can be such an emotional thing to get into.

However, here’s what we also understand. There’s a great benefit to leaving and cashing in your chips, at least on paper, with the taxman when the chips are down. Especially when you see that the crypto bear market is in decline.

So in a moment like this, it’s a great time to say that you’re off 30%, 40%, or even 70% less.

You can leave the tax system and go on “greener pastures” where you’re no longer subject to rising taxes and rising regulations on crypto.

You see, there’s a lot of increase in reporting requirements in a lot of legacy brand countries. We talk about how things will be more and more difficult with crypto as the years progress.

Going Overseas When the Crypto Bear Market is in Decline

As the “goody-two-shoes” of the offshore world, Andrew has always known that he didn’t want to live in a place where he has to lie to the taxman.

First of all, he’s not going to do that, and neither should you.

So it made more sense to go where he’s treated best.

We’re going to follow the law, and we’re going to do so in a place that treats us beautifully. Maybe this is in a place with zero taxes, with great regulations, and where everyone’s happy.

So we don’t want to stick around in a country where things are getting worse and worse.

In our perspective, if the crypto bear market is down right now, then you can go overseas.

You can go to Puerto Rico, and if you can commit at least a couple of years in the scope of your life, it isn’t much, right? So three to five, or even seven years are good time frames.

Sometimes, people also think they can move overseas for six months, cash in all their chips, and then come back to avoid being taxed.

Now, that’s pretty difficult, but if you look at it from a three, five, and seven-year perspective, and if you believe that crypto is going back up in the long term, then now is the time to get your chips up the tax table at a lower value.

Although, if you think that the numbers are going to be lower still, then you can wait for that.

However, we think they’re going back up, so now is such a great time to do that.

This is so important for crypto maxi people who are all running crypto.

Sure, we have cryptocurrency stocks, and we know how to invest in cryptocurrency. However, we’re not all in, and so for us, we’re simply writing it out.

Obviously, we’re already going where we’re treated best, and you should too. Especially if you’re all in.

This can have some pretty serious consequences on your net worth, what you pay in taxes, and when you leave.

So what are the three options that you can go for?

Moving to Puerto Rico to Respond to the Crypto Bear Market

The first thing that you can do when responding to the crypto bear market is to move to Puerto Rico.

This is especially beneficial if you’re from the United States of America.

Yes, you can keep your US citizenship and live in Puerto Rico for a number of months a year. There are also different programs with different tests that you need to pass to qualify, but let’s say that you can commit about half of your time. Then you can go there and lock in the value.

When you go to Puerto Rico now, the crypto markets can be so volatile. This means that no matter which of these processes you’re going through, it’s going to be so hard to exactly lock in the lowest prices.

However, if you can get it pretty close, then you can go down to Puerto Rico and say, “Here’s what I have, and those gains will stay put.”

Then as a US citizen, you can either recognize them in Puerto Rico. Not only that, but you can settle it up with the IRS on the part that they’re entitled to, to the part that you had when you were in Puerto Rico.

You see, anything that comes back and any further gains that are taxed in Puerto Rico comes at 0%. So you’re basically locking in the numbers without even the need to necessarily pay right now. This is one of the best crypto bear market strategies that every crypto investor needs to know.

Leaving Your Country as a Response to the Crypto Bear Market

The second thing that you should know is that you can simply leave your country and live abroad.

For non-Americans, becoming a tax non-resident of your country is not done in a day. You need to close connections to that particular country, and you need to shut down your ties. Not only that, but you need to migrate other assets and non-crypto assets somewhere else. Plus, you need to make sure that you don’t have a house there.

In some cases, you need to leave the country physically, which for some people might be difficult.

Sure, it’s difficult to physically leave, but if you settle it up, then you can leave your country.

When you do leave, you can go through the tax on residence process that every country has, which is their own “exit tax.”

Some countries don’t have an exit tax, which is why in that case, we would just be getting out as soon as possible.

However, if you’re Canadian, Australian, or someone from a legacy brand country, then you probably have an exit tax of some kind.

Dealing with Your Country’s Exit Tax

If you think that crypto will go through the roof and fiat won’t, you can potentially provide fiat denominated assets in some countries.

However, when you get to the day of your departure, they’re going to say that you owe some more money.

If you’re leaving when Bitcoin is $30,000, and you see the cycle going to $100,000, then you just have a $70,000 per Bitcoin tax. Whatever the percentage is on that capital gain that you will have in the future.

There are possibilities to shift and move to a zero-tax country, a territorial tax country, or a country that has an exemption on crypto. Maybe there could even be an exemption on all income for new arrivals.

Then you can go and book that income somewhere else, but you can’t just say, “I got from $1 a Bitcoin to $30,000.”

You can’t just leave and not pay taxes. This is why most developed countries have exit taxes.

In doing this, you have a lot more flexibility than non-Americans, besides just being able to go to Puerto Rico.

You just have to find a place that’s tax-friendly.

Expatriating and Giving Up Your Citizenship as a Response to the Crypto Bear Market

The third thing is more for Americans as well.

If expatriating from the country and giving up your citizenship might seem pretty emotional, then this is why we listed it last.

However, let’s say that you don’t want to go to Puerto Rico, then don’t do that.

The main option that you have is saying that you’re just not going to be a part of the US tax system at all. Although, bear in mind that the United States does tax people on a worldwide basis.

There’s no exemption for the best cryptocurrency or passive income. Plus, if crypto is somehow involved in your business, then maybe this is worth looking into.

Although generally speaking, you still need to have an active income that can be exempted, and even that’s not perfect. Still, you can save a lot of money moving your business overseas.

As an American, it’s not quite as easy as it used to be.

For crypto, you’re kind of stuck for stocks and that kind of stuff. So if Puerto Rico isn’t an option for you, then you still want the flexibility to go anywhere else in the world. This is why renouncing your citizenship shouldn’t be taken lightly and shouldn’t be done for financial reasons.

Sometimes, the financial benefits are the icing on the cake. However, there are certainly other reasons that you might want to leave. So if you’re going to cut your ties with your country thoroughly, then that’s one thing that you can do now.

Figuring Out the Best Crypto Bear Market Strategies

Here’s the challenge, there’s a waiting list building up because the embassies were closed for over a year.

You have a handful of them reopening right now to where if you already have a second passport or if you don’t, you should be working on one.

Andrew thinks that everyone in crypto with any kind of crypto assets should be working on or should already have a second passport as an insurance policy.

Although if you can get your second passport, you can go through this process and cut your ties with the United States.

The day before you go in and you deal with them for the last time, they’ll figure out what you have on that day. So now it’s a matter of figuring out all the tax strategies.

Not only that, but you have to make sure that you’re presenting yourself in the best light and reducing your tax legally. As much as possible, everything should be done legally, and everything should be above board.

Sure, there are forms to file, and there are things to do in all these cases. Although, if you do it legally, we think the silver lining’s when crypto prices go down.

Assessing All Your Assets to Prepare for the Next Crypto Bear Market

It’s a great opportunity to say that your assets are down on paper.

Whether you’re moving to Puerto Rico or simply leaving your country as a tax resident. Perhaps you’re even giving up your citizenship.

In these cases, you have to be able to show your financial position that day.

It’s best to go through the right steps to get yourself out of the system legally. Whatever happens later, you still get to keep that if you make the right moves with where you want to go.

This is why we think people always come to us when crypto was $65,000. There’s a line on the block, and we still have a lot of people coming to us. However, what we always see is when the chips are going down, people kind of work on doing it later.

Now’s the time to do it, and you can leave when it’s $65,000.

If you think it’s going from 65 to 265, that’s still a good move. Although, right now, you have an opportunity to reduce 30%, 40% to even a whopping 70%. That’s one of Andrew’s freedoms.

We’ve been thinking, put the fear aside this time. It’s worth it to save yourself some money.

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