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It’s a lot more understandable when newbie investors are still dwelling on the profit maximization mindset when investing in Bitcoin, but as one advances and becomes more experienced and equipped, it’s important to make a shift in focus from the profit maximization approach to wealth preservation and management approach.
It is likely that each of us will continue to monitor the extent to which our BTC holdings are in profits, yet the extent to which they are in profits should not really be a great motivator when it comes to figuring out where we are at. Are we still accumulating bitcoin or have we passed into a maintenance stage. if we are in a maintenance stage we might well be wanting to preserve our overall bitcoin size, and sure we might buy and sell from time to time, yet whatever we do would not be decreasing our bitcoin stash with any kind of significance. Maybe at some point we might conclude that we are able to live off of our bitcoin or to use our bitcoin to supplement whatever other income that we have, then at that point, we might start to draw from our bitcoin based on price based withdrawals (hopefully in a sustainable way).. and/or time-based sustainable withdrawals.
Historically Bitcoin has continued to have quite a great value appreciation so that once we are at a decently sized stash.. possibly at an overaccumulation level, then likely we can figure out systems to start to withdraw from our bitcoin stash, and our withdrawal rate may well end up being way less than the amount that the bitcoin is gaining in value (even accounting for the debasement of the dollar and other fiat currencies).
Yeah, it’s understandable to monitor how profitable your investment has become, but this shouldn’t be because you wanna take out those profits, but because you wanna use that as an opportunity to assess and evaluate how much progress you’ve made with your investment and how closer you’re getting to your goals.
For me, in my first year in bitcoin from late 2013 to late 2014, I did not really try to figure out if I had enough bitcoin or not. I had a plan to invest for 6 months with a certain level of budget, and then after the first 6 months, I extended that same level of budget for another 6 months, so after 12 months, I started to figure out some assessment of whether I had enough or not.. .and by the end of 2014, I was tentatively thinking that I had enough, but then the BTC price continued to stay down and to go lower, after I had made the assessment that I have enough, so then after my additionally accumulating through much of 2015, I started to calculate that I had more than enough... so surely not everyone is going to come to similar conclusions on similar timelines.. and even my way of calculating value changed along the way, and by the time we got to 2019 or so, I started to calculate the value of my stash using the 200-WMA rather than using spot price, even though surely spot price is always relevant to some extent in terms of the price that any buys or sales will be made...
yet part of my point is that our building of a BTC stash can end up influencing us in regards to the extent to which we have a large enough BTC stash that will inform us whether to continue to accumulate, and if we conclude that we have enough BTC or more than enough, then we will likely go into some kind of a maintenance stage prior to going into sustainable withdrawal stage - even though surely we would never necessarily be precluded from buying and/or selling bitcoin at any of the various stages, even though it seems to me that if we are concluding that we are still in accumulation stages, then we should not be employing any kinds of selling techniques (except sell and replace for the making of purchases/transactions in BTC).
I quite believe that the shift from accumulation to maintenance makes a lot of sense, because you get the chance to focus on preserving your Bitcoin portfolio while still having the chance to make some reassessment and possible adjustments occasionally and when needed.
If you assess that you have enough or more than enough BTC, then you may well employ price-based sustainable withdrawal that may well ONLY sell 10% or less of your BTC stash for every time the BTC price doubles from whatever BTC price starting point that you elect.. so for example, you might decide that if your average cost per BTC is $10k, then you are not going to start your price-based sustainable withdrawal until BTC prices are at least $34k, and then so maybe your first sale of 10% is at $34k, and then your second sale of 10% is at $68k, and then you plan to sell 10% at $134k.. or some variation of those numbers.. and you don't even need to sell 10% at a time. Once your threshold is reached maybe you decide to sell 0.5% to 1% every time the BTC goes up 10%.. or you choose some other number that you consider to be reasonable and to realize that if the BTC price keeps going up you are going to be left with way less bitcoin, and you can choose if you would be content with those numbers including potentially having a bunch of fiat that is not going to hold its value as well as bitcoin.
I set forth some ideas for tables for structuring price-based sustainable withdrawal for guys who might consider themselves getting close to or exceeding overaccumulation status.
When we look at the history of Bitcoin, we’d observe that Bitcoin’s value appreciation has been very significant, and this potentially allows for conservative withdrawal rates. And this is exactly why it’s crucial to employ/initiate a sustainable withdrawal strategy when transitioning to living off you Bitcoin Stash or supplement income.
Guys frequently get excited and they withdraw way too much BTC too quickly, and so that can be somewhat problematic, but if they project out various numbers based on their stash size, they should be able to come up with some acceptable formulas, while at the same time, there likely continue to be needs to ongoingly consider that we are not making the common mistake of selling way too much bitcoin too soon, especially since we likely realize that bitcoin is amongst the best, if not the best of assets in which we can hold value.
Strategies like the DCA or setting aside a fiat buffer should be considered when trying to balance withdrawal rates with Bitcoin’s market volatility. I may be wrong but I feel it’ll also be a pretty great approach to also diversify their withdrawal approach by using a combination of both the price based and the time based withdrawal strategy.
Personally, I found price-based withdrawal became relevant for me prior to time-based withdrawal, yet there is nothing wrong with employing both as long as you are not withdrawing amounts that overly deplete your stash... and for me, for sure it helps to have some ideas about how much BTC that you need to have to reach some kind of a sustainable withdrawal rate, and then if you ultimately are withdrawing somewhat less than your sustainable withdrawal rate, then your BTC stash should be growing in value (based on the 200-WMA measurement) faster than your rate of withdrawal...
So for example,
right now if we might want to have a withdrawal rate of $80k per year, then we likely need to make sure that we have at least 17.2 BTC at minimum, yet it likely would help to have a bit of a cushion of 10% or 20% more than the bare minimum in order to start to withdraw at that rate. Otherwise, perhaps we either refrain from withdrawing until our stash exceeds the requirements or we withdraw at a much lower rate until our stash exceeds the requirements. I think that bitcoin grows at such a rate that we should NOT be trying to be greedy, and once we have achieved a status of overaccumulation, we are likely able to live quite well off of our BTC stash to either completely supply our target income or to supplement our other income sources.
For example in your case Tungbulu, you have not even been registered on the forum for a whole cycle. Have you been accumulating for more than a cycle, or are you just looking forward to sustainable withdrawal - because I think that it takes a while to get to overaccumulatoin status, whether we are talking about a $80k annual income, a $40k annual income, a $20k annual income or some other amount that we might consider to be our fuck you status level or whatever other level of income or supplementing income that we might want to have once we enter into som kind of sustainable withdrawal practices (whether price-based and/or time-based sustainable withdrawal practices).
One may need to regularly stay informed at all time when preparing for market fluctuations, also being adaptable and most importantly, maintaining a long term perspective of the asset, because this is the actual thing that’ll help ride out the effects of temporary or short term market fluctuations and volatility, and lastly, it’s also very essential for investors to regularly consider their risk tolerance level and regularly adjust their investment strategies accordingly and when the need arises.
I am not sure if we really need to get worked up about prices no matter what stage we are in... even though it is likely good to know what stage we are in so that we can avoid starting to withdraw too much BTC too soon, but if we are still building our BTC stash, we may well have some time between our building of our bitcoin stash and before we enter into any kind of sustainable withdrawal. I personally also think that we could enter into price-based sustainable withdrawal while we are still in our maintenance stage, yet time based sustainable withdrawal might not kick in until we are past our maintenance stage and into our liquidation stage.
It is not easy to try to assess for others or to make overly broad generalizations regarding what guys should do, yet if any of us got into bitcoin while already knowing its inevitable volatility, that inevitable volatility does not go away, yet we can still attempt to create systems and to follow systems around that inevitable volatility, which part of my own solution had become to use the 200-WMA as my BTC value assessment tool rather than getting worked up about BTC spot price movements, even though none of us HODLers can completely ignore BTC price volatility.
Having steady job and income is most important thing before even thinking about putting money into something as unpredictable as Bitcoin. If you do not have regular income you will be very tempted to sell your Bitcoin if you have any money problems and that mostly leads to losing money. And idea of buying Bitcoin regularly with DCA is good way for many people because it helps reduces risk of buying at wrong time and encourages thinking about it as long term investment.
Having a source of income is not even negotiable. And not just a regular source of income, having a good one also gives you a better chance of accumulating more fractions, setting aside your emergency funds(if you probably haven't done that from day one), and also setting aside your basic needs as well.
You do not need to have a steady job in order to invest into bitcoin.
You do need discretionary income, though...so hopefully anyone is investing into bitcoin from their discretionary income and/or their savings.. not from money that they need for expenses... and hopefully their investment timeline is 4-10 years or longer, since bitcoin is better as an investment rather than as an attempt to trade it.
Today is not my time to buy nor to sell...but to HODL until my desired price of Bitcoin is reached. While it is still good to buy more because there is an uptrend right now, the risks are getting bigger as the market can dramatically go back to where it was. Now, people with Bitcoin should HODL still as there can still be more going on here...maybe until we reach a new ATH (hopefully prayerfully!).
If we go by your forum registration of November 2020, then maybe you have been in bitcoin for a bit more than a whole cycle, and maybe you have accumulated enough BTC or more than enough BTC, yet I would not presume others to be in the same situation, since there is more to bitcoin than merely trying to figure out its potential future price movements.
So then the question remains do you (or others) have enough bitcoin and/or more than enough bitcoin or not?
If you are failing/refusing to buy because you think that you can buy back cheaper, then you are likely thinking about bitcoin wrong, especially if you have not concluded that you have enough bitcoin or that you have more than enough bitcoin.
Personally, I doubt that you have reached such a status, since you seem to be just trying to buy more bitcoin on the dip, and so you are worried about ongoingly buying, even though you likely have not reached a status of having enough or more than enough bitcoin.
So likely you don't even understand bitcoin sufficiently to be making such proclamations that others should follow your suggestion to slow down on their BTC accumulation and/or to employ a waiting strategy without even assessing if they have reached a status of having enough or more than enough BTC.
These are not easy assessments.
Let's say for example, that you were in your early 30s in 2020 and you make around $50k per year, and right around over the 5 years prior to your getting into bitcoin you had built an investment portfolio that was right around your income, and you decided to take $20k from that investment portfolio and to buy bitcoin, so you got 1 bitcoin in November 2020 for right around $20k, and then Since November 2020, you had decided to buy
$200 per week in bitcoin, so you had invested an additional $46.5k and you got around 1.32 BTC. So you have a total of $66.5k invested into bitcoin and you have 2.32 BTC. Do you think that you have enough or more than enough bitcoin based on your salary? You have
$108k based on 200-WMA, and $225k based on spot price valuations. And maybe you want to have a sustainable income of $80k per year? Based on the hypothetical that I gave, I personally think that a guy in that kind of a position (even though doing quite well) needs to keep building up his bitcoin stash. You seem to believe that waiting is a good strategy?
Today is not my time to buy nor to sell...but to HODL until my desired price of Bitcoin is reached. While it is still good to buy more because there is an uptrend right now, the risks are getting bigger as the market can dramatically go back to where it was. Now, people with Bitcoin should HODL still as there can still be more going on here...maybe until we reach a new ATH (hopefully prayerfully!).
This shows how faint hearted you are by trying to advise against buying bitcoin this time. You've been in this forum for close to 5 years and I thought that you should have understood that every bitcoin price is for buying. A real investor invests at all price. The last time bitcoin was at $100k, many still accumulated the much they could and while it fell from that amount, others still kept accumulating. Anyone who has long term investment in mind would always invest no matter the price of bitcoin. Bitcoin is subject to a new ATH always no matter the current price.
What happens when the price drops is just one of the features of bitcoin (Volatility). It doesn't mean any panic. Teaching newbies to avoid buying bitcoin because you feel the price is high now even when it hasn't reached the previous ATH of $109k is misleading please.
From his statement, I didn't come across where he advised anyone against buying Bitcoin, he only stated his own personal decision and anyone that's been following this thread and still choose to copy what he's just said must be very delusional, maybe he's trying to act according to his financial strength and the good thing is that he didn't mention that people should sell but then if his desired point of selling is after Bitcoin attain a new ATH and he's not even held up to a full circle then am not in support of that, but that's his decision anyways, afterall everyone is responsible for their own actions.
He sounds a bit lost to me, and he seems to be merely focusing on what he thinks the BTC price is going to do, which it seems that he is presuming too much about his concerns about our current price potentially being "toppy."
Left for me I'll keep advising people to keep holding for atleast a full circle but going beyond that is much more preferable and it's not just holding they should seize the opportunity of adding to what they're holding whether weekly or any suitable interval especially now that Bitcoin is yet to attain a new ATH and even grow further as we all hope.
Just holding is not any kind of a meaningful solution if someone does not have enough bitcoin. It is nearly as bad to suggest that guys hold bitcoin rather than suggesting that they keep buying.
