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The holding period rewards Bitcoin savers rather than short-term speculation

Anyone who saves Bitcoin for the long term today is treated differently for tax purposes than someone who trades it daily. It is precisely this difference that would disappear if the holding period were eliminated.

Key Points at a Glance

• The holding period rewards long-term saving rather than short-term trading.
• This principle has existed in German tax law for about 100 years.
• Without a holding period, holding an investment for the long term would no longer offer any tax advantage.
• Studies show that frequent trading is detrimental to most individual investors.
• Politicians are calling for more private retirement savings—so long-term savings should not be penalized by the tax system.

Bitcoin savers are not speculators

In public discourse, the impression is often given that Bitcoin is primarily a speculative asset. In reality, however, the picture is quite different.

Many people invest in Bitcoin today just as they would in an ETF: small amounts are invested month after month—often over many years. The goal is not a quick profit, but rather long-term wealth accumulation or additional private retirement savings.

It is precisely this behavior that the current holding period encourages.

Anyone who holds Bitcoin for the long term can sell it tax-free after one year. On the other hand, anyone who constantly buys and sells must pay taxes on their profits.

Tax law thus provides a clear incentive:

Long-term saving is rewarded. Short-term speculation is not.

This principle has been around for almost 100 years

The holding period was not introduced because of Bitcoin.

As early as the Income Tax Act of 1925, lawmakers distinguished between short-term speculation and long-term wealth accumulation.

The basic idea remains the same to this day:

Those who trade assets in the short term make speculative gains.

Anyone who builds wealth over the long term is engaged in personal wealth accumulation.

This distinction applies not only to Bitcoin, but also to gold, works of art, and foreign currencies.

The holding period is therefore not a privilege specific to Bitcoin, but rather part of a system of German tax law that has been in place for decades.

The holding period does indeed change behavior

Tax rules influence investor behavior.

This can be scientifically proven.

International studies show that sales occur significantly more often immediately after the expiration of tax holding periods. Investors deliberately wait until the tax-free threshold is reached.

The holding period therefore serves its purpose exactly:

It encourages people to build wealth over the long term rather than act in the short term.

What would change if there were no holding period?

If the holding period were eliminated, gains would be taxable regardless of the length of time the investment was held.

For many investors, this raises the question:

Why should I even hold onto my Bitcoin for many more years?

The tax benefit of long-term saving would have disappeared.

Of course, that wouldn’t automatically turn everyone into a day trader.

But one thing is certain:

Holding an investment for the long term would no longer be more tax-advantageous than short-term trading.

The incentive to patiently build up wealth that has existed until now would be lost.

Long-term saving protects small investors in particular

Individual investors, in particular, benefit from a long-term strategy.

For years, numerous scientific studies have reached the same conclusion:

The more frequently retail investors trade, the worse their returns are.

Trading incurs costs, leads to emotional decisions, and often results in investors buying high and selling low.

Studies by the Bank for International Settlements (BIS) also show that many small investors enter the market during periods of euphoria and later incur losses.

The holding period counteracts this behavior.

It rewards patience rather than hasty action.

In doing so, it supports precisely the kind of wealth accumulation that policymakers and financial education initiatives actually aim to promote.

The Bitcoin adoption study also paints a different picture

A recent study on Bitcoin adoption by Oberwasser Consulting confirms this impression.

The study shows that Bitcoin is purchased primarily for the purposes of long-term wealth accumulation, financial independence, and retirement planning.

Short-term trading, on the other hand, played hardly any role among the individuals surveyed.

The reality of life for many Bitcoin users therefore fits much better with the image of a long-term saver than with that of a speculator.

The counterargument: Does the holding period lead to a “lock-in”?

Critics argue that tax-related holding periods can discourage investors from reallocating their capital to better investments.

This so-called ” lock-in” argument is valid.

Investors whose holding period is about to expire may delay selling, even though reallocating their portfolio would make financial sense.

But it is precisely this effect that also shows:

The holding period works.

It provides a real incentive to build wealth over the long term.

The political question, therefore, is not whether the holding period is effective—but whether long-term saving should continue to be encouraged.

Long-term saving is explicitly supported by policymakers

The federal government regularly calls for more private retirement savings.

The early retirement pension, the reform of private retirement savings, and the planned retirement savings account are intended to encourage citizens to build up their assets over the long term.

It would therefore be contradictory to eliminate the only tax incentive for long-term saving in the case of Bitcoin, of all things.

Anyone who wants to encourage personal responsibility should not treat long-term investing as inferior to short-term trading.

Conclusion

The one-year holding period is much more than just a tax-related quirk for Bitcoin.

It provides a clear incentive for long-term saving rather than short-term speculation—a principle that has been an integral part of German tax law for nearly 100 years.

Numerous studies show that retail investors, in particular, benefit from a long-term strategy, and that frequent trading tends to reduce their returns.

Eliminating the holding period would remove this incentive. Long-term holding would no longer offer a tax advantage over short-term trading.

If policymakers want to encourage more private wealth accumulation and personal retirement planning, they should maintain the tax incentives for long-term savings—rather than eliminating them.

Sources and References

• § 23 of the Income Tax Act (EStG) – Private Sales Transactions: https://www.gesetze-im-internet.de/estg/__23.html
• Federal Constitutional Court, Decision of July 7, 2010 – 2 BvL 14/02 (Legislative Purpose of § 23 EStG)
• Federal Finance Court, Judgment of February 14, 2023 – IX R 3/22 (Classification of Bitcoin as Other Economic Asset)
• Barber & Odean: Trading Is Hazardous to Your Wealth (Frequent Trading Reduces Long-Term Returns)
• Bank for International Settlements (BIS): Crypto Trading and Bitcoin Retail Investor Outcomes(Working Paper 1049; Bulletin 69)
• OECD Taxation Working Paper No. 72 (2025) – Tax Retention Incentives and Lock-in Effects
• Bitcoin Adoption Study: DACH 2026, Peter Rochel / Oberwasser Consulting (qualitative study on the motivations of Bitcoin users)