Topic: JJG's Bitcoin Investment Ideas (Sustainable Withdrawal / Portfolio Maintenance) - page 4. (Read 1331 times)

Thank you for the meaningful reply, I find that there are very few careful calculations done, thereby most "strategies" and discussions don't have the data to back them up.

The key summary for me is proof of what I've always believed. That an accumulation strategy that lets you reap continuous benefits is still much more beneficial than pure stacking. I always see my holding as something that must not allow "normal" spending as detrimental even psychologiclly (especially when missing out the highs).


Yep, and for me, I need to even add my local currency price to my own data if I ever want to do so. Because USD wise, withdrawals already show a supplementary figure that encourages holding over long term, but because since 2018 when I started seriously DCA, dollar vs my currency is also breaking ATHs.

Just by holding BTC I not only avoided my local inflation but overcame it (a double benefit of BTC/USD value!

Of course, the ideas underlying this particular chart do not have very much at all to do with DCA and/or the various ways that BTC HODLers may end up accumulating their bitcoin, and even though we could perform these same kinds of budget limits within whatever amount of BTC that we had accumulated and were able to put into the overall account value, it still might not be very practical to start to engage in these kinds of sustainable withdrawals until the size of the account have built up to an amount in which the withdrawals are meaningful.

Actually, I am not sure if I am going to change the OP, but I am thinking that I need to come up with another chart that shows the dollar values for each of the months, and so maybe I can just take an estimated average BTC price for that particular month... but that seems to be something that I could probably do in order to attempt to make the monthly withdrawal amounts more relatable to be able to see both the BTC value and the then dollar value..

Essentially, it takes efforts to continue to hold and to aim for a certain quantity of BTC in order to attempt to consider the withdrawal amounts as meaningful.  

For example in the current chart, we see that as long as the BTC price is above $26,250 (M,3) then the monthly amount that can be spent is nearly $2,500 (M,11) (M,13) and also .06860513 (M,18) (M,20).  

Even if your  account balance were to be half as much ($1,250 instead of $2,500), it still might be an o.k. withdrawal rate if it is merely supplementing other kinds of income.

I do expect that the withdrawal rate (of 4%)(L,23) is way more than sustainable, and probably we could have a higher withdrawal rate - however, maintaining the lower withdrawal rate right now likely allows for more growth of the value and a kind of deferred gratification - even though it is not guaranteed to continue to go up greater than 4% per year.. even though historically we have not really every had yearly rates that have been less than 20%.  You can see those actual rates that the 200-week moving average had gone up in the 4th column of my fuck-you status chart (each of the percentages therein represents 6 months).



I have come to conclude that the power of bitcoin's compounding surely comes from experiencing several doublings of the value of the BTC in the account, and so sometimes we get caught upon periods in which we might wonder about the rate of growth, but it could take a couple of full cycles to really experience bitcoin's compounding effects, and since bitcoin's investment thesis does not seem to be getting weaker, it seems better to just allow it to continue to compound, and to exercise some self-restraints in the withdrawal rates - which also would include withdrawing (in accordance with Gresham's law practices) from other sources (money of less value) prior to withdrawing from bitcoin.
 


I have historically done quite a bit of spend and replace in order to keep the BTC at the original levels and maybe even to take the opportunity of the spend and replace to replace with more BTC than I had spent.. which surely is important during the BTC portfolio building years.. but then in my above chart and the topic of this thread would be that you already have reached your goals, so no need to spend and replace from this one as long as you have reached your goals and you are spending within the limits..even though I could also see that someone might be spending monthly from his/her 21 bitcoin, and then all of a sudden if the BTC price dropped by 30% to 50% there might be some desires to buy more BTC and to put it into a fund like this in order to increase the balance (I probably should include a column for adding value to the accounts, too).  
 


It should be able to go on forever without losing value if the average of the rate of growth is higher than the withdrawal rate... even if there might be some years in which BTC might not perform as well, yet so far the 200-week moving average has not gone down, even though it is not out of the question that the 200-week moving average might not continue to go up.. but we can cross that bridge if we get there.
 

Yep.. if you want to try to be accurate, then every month or whenever you might be considering how much you are able to spend within your monthly budget limit, the 200-week moving average should be plugged into K,3.   I think that anyone can learn to exercise discipline in these regards, even though surely so many folks want to live off of the principle and the interest rather than just the interest, and so if you can limit your budget to living off of the interest only, then that would be a good thing - even though I can see why you might be tempted to go "over -budget" and then you end up depleting your principle and no longer following a sustainable system, even if it might still end up working out for you.

Thank you for this thread, I'm ashamed that I never bothered to make this kind of calculation. I practice DCA too but I don't have the discipline to do 2 things. First, to make actual dates and calculations. Secondly, not to touch it.

So over the past years especially from 2019, I only know the growth in coins, because I add DCA to my personal wallet and see it grow.

BUT I take out sometimes to fund small habits + expenses, to try to return it to origiinal levels asap. I think therefore there is an idea of "sustainable withdrawal" like this to ensure you keep enjoying the benefits while still maintaining a portfolio.

The thing is the time to watch the 200-week trend line, I guess with automated indicator easier but I know I would fail at this "discipline".

I had been thinking about these kinds of budgeting ideas and even the ideas of having a kind of guided passive income from a stack of BTC for the last year and a half or so, and I had some posts with other forum members around the May 2022 and June 2022 major BTC price drops, in which I was talking about the possibility of funding a developer with a couple of bitcoin funds and maybe even using 21 BTC as the amount with each of the funds.  One possibility could be that one of the funds would be to fund a developer (or perhaps more than one developer as the fund's value might grow from BTC's probable future appreciation) and the second fund might be to pay for the administration costs.

Of course, there are a variety of reasons that someone might create a fund, and might even do so in order to fund their own expenses... to establish budgeting limits regarding how much to be able to cash out on a monthly basis.


The chart is not about establishing an investment position, and it is also not about my particular investment, since they are hypothetical accounts, but instead about ways to consider spending within budget limits that refer to the balance of the account, the BTC price position in reverence to the 200-week moving average and the rate of withdrawal (in this case I use 4% per year).   

In regards to the accumulation of BTC and other related ideas, I have more extensive investment ideas in my other related thread that I mentioned at the beginning of the post.


Regarding your links, I frequently have cite dcabtc.com and also the SSS thread... but I had not previously seen the costavg.com website or your thread about it, so in the coming days, I will take a look at your thread that you referenced.

You have a great plan for your Bitcoin investment and thanks for sharing a sheet of your investment too.

I can contribute two websites for Dollar Cost Averaging that is certainly good for investment especially investment in Bitcoin.
https://dcabtc.com/
https://costavg.com/ . I introduced it in Dollar Cost Averaging with costavg.com include exchange fee.

DCA is usable for taking profit and it is guided in (SSS) - A Sane and Simple bitcoin Savings plan.

Indeed I've been following up with some of your threads that talked about having something like this coming up and i must commend you well for taking your time in making the precise breakdown on making withdrawals and how we can also have an sustainable investment, you've also talked alot about bitcoin holding, DCA and many other relevant aspects relatively having similarities with this.

It's something interesting to make an investment and it's another thing to have that tenacity to wait patiently without making withdrawal of our investment due to some other reasons beyond the ordinary, if we are making an investment, then we should know that it's something that we should do out of the passion for holding it over a long period of time, because we cannot release and make withdrawals when it is not yet time to do so but there are other needs that are extremely pushing us for making withdrawals, we should plan well right before we start.

Opening Post 4:  Reserved - still to be determined

Opening Post 2:  Creating monthly withdrawal limits - based on the then BTC Spot price's direction and distance from the 200-week moving average, and of course a withdrawal rate and quantity of coins in the account

Ideas of sustainable withdrawal that attempts to measure monthly budget limits based BTC spot price relative to the 200-week moving average

There has been a while that I have been talking about a chart/table that I had been working on that attempts to guide monthly budgets within the parameters of the 200-week moving average.  Here's an example with two hypothetical accounts.. Account 1 and Account 2.^**



**An amended and improved version of the above chart eliminates the second Account, and shows the ongoing BTC Spot Price and the 200-week moving Average in order to show how they compare with one another.

From the above chart, you should be able to see that if there are two hypothetical accounts, and each of the accounts started out with 21 BTC in September 2022, and they have been experiencing withdrawals on a monthly basis.  The amount withdrawn each month should be less than the limits of their monthly withdrawal limits based on the various formulas therein that also peg to the 200-week moving average and also the limits are based on then balance in the account.

We can see that the actual 200-week moving average gets put into the spreadsheet in order to show the limits for the upcoming month.  In this case, I have projected the 200-week moving average to be $29,041 (K,3) within the first day or so of December 2023.  You can see the actual here.

 The spreadsheet autofills the various threshold BTC spot prices in row 3 in accordance with what percentage the BTC spot price is above or below the then 200-week moving average, as reflected in row 2.  

For example, to show the lowest Spot price on the chart (H,3 = $18,850), as long as the BTC price is above $18,850 but less than $20,300 (I, 3) (that is more than 30% below the 200-week moving average, but less than 35% below the 200-week moving average), then there is an authorization to ONLY spend 40% (H, 1 = 0.4) of the 200-week moving average monthly rate which based on the 4% per year, 1% per quarter or 0.33% per month which is also autofill calculated into the sheet (based on the 4% amount in L,3). So the monthly budget limit for that person would be 0.02744205 BTC (H, 20) (or $517.28 in H, 13).

In my model, the BTC spot price has to be 25% (M, 2) higher than the 200-week moving average (which is estimated to be more than $36,250 (M,3) at the beginning of December) before account 1 would be authorized to withdraw the full (M,1) 0.33% per month allocation (as the percentage that is authorized is depicted in row 1), so that would be authorized to spend up to 0.06860513 BTC (M,18 and M,20) for the month and right at around $2,486.94 (M,11 and M,13).

Another clarification that I should make is if the BTC price were to exceed the highest BTC spot price on the furthest left of Row 3 which would be $435, or higher (U,3), at the beginning of December, which is 1,400% higher ((U,2) than then 200-week moving average of $29,041 (K,3), then amount of authorization of BTC to withdraw is still the same (0.06860513 BTC for the month); however there is an authorization to withdraw and to cash out of BTC up to 60 months of the monthly limits in advance..which shows as 4.11630772 BTC (U,20)  (U,13 = $1,790,593.86).  

Of course once the BTC price gets 0.33% or higher above the 200, week moving average, then gradually the number of months that can be withdrawn in advance increases at various thresholds as reflected in the increases in the percentages above the 200-week moving average in row 3 starting from column N and going through column U.  And the number of months authorized to withdraw in advance are reflected in Row 1 and show greater than 1 month in advance starting from Column N at 2 months and Column U at 60 months.

My tentative thoughts is that it would be a preferred practice to cash out several months of the monthly authorization in advance under such conditions of BTC prices many multiples and/or multitudes above the 200-week moving average in order to expect that some of the higher multitudes of being that high above the 200-week moving average are not really sustainable... and we have seen that non-sustainability high spot BTC prices historically, even though we cannot really know in advance how far UP, how fast the BTC spot price might go up and/or how long it will last at various higher price thresholds.  

I speculate that as the BTC price is going up and if it reaches higher multiples above the 200-week moving average, we might still get anxious about selling additional BTC (beyond the monthly sales authorization), and so we might still end up selling a number of months of our BTC authorization in advance at lower BTC price  thresholds.  It seems to me that even if the BTC price were to go 200% above the 200 week moving average as reflected in Column Q, we might end up selling 12 months of our monthly authorization in advance, so it might seem that we could be precluded from selling any BTC for the next 11 months; however, if a few months later, the BTC price were to reach the thresholds in Column S, then it may be quite reasonable to sell an additional 24 months to reach the authorization of being able to sell 36 months in advance (S,1), so we can make those kinds of calculations in order to stay within our limits but not necessarily being overly penalized for selling early even though we would have been able to sell more for higher but we are still able to do it within some reasonable limitations that are still quite generous in terms of the amounts that we are able to sell in advance, and the same is true for getting into the higher BTC spot prices of Column T or Column U.  

If the BTC price reaches higher thresholds, there would be new authorization to sell additional months in advance based on the higher BTC spot price movement, and at the same time, we can continue to plug into our formula based on how much we had already sold and based on the 200-week moving average continuing to move up while the BTC spot price is moving up and the higher the BTC spot price is out of line with the 200-week moving average (and for longer that the BTC spot price stays high) then it will cause the 200-week moving average to get drug up faster and faster than it had been previously (and can be measured daily or whatever is ball-parkedly reasonable numbers to use in K,3).. .It can be measured here, too.

I understand that there is quite a bit of data in the charts and some of the ideas regarding the monthly spending limitations of the accounts are somewhat discretionary, but starting out by sticking with standard 4% per year withdrawal rates and even presume a kind of perpetual ability to withdraw BTC under this kind of system with a kind of underlying assumption that BTC prices (especially the 200-week moving average) will continue to go up at least 4% per year on average, so even if there are some down, years the account is not materially getting depleted in terms of its dollar values (or whatever other utility we might be measuring our cost of living).  I also realize that account 1 and account 2 are not very materially different from each other in terms of the current balance of the accounts, so maybe i could have had come up with some differences in which one of the accounts might have hade been maxing out the monthly budget limit and the other one was spending minimal levels.. Maybe a future version I will change them around a bit?

Any thoughts or feedback would be appreciated, or even some real life examples of trying to figure out these kinds of balances.  I am focused on BTC in this example, but of course, there could be various other assets that comprise someone's investment portfolio and maybe even cashflow, so surely I am not against any kinds of Gresham Law types of considerations in which there would likely be spending from other assets prior to spending from BTC, so if the accounts are not spent to the max of their limits, then whatever BTC remains would just continue to sit in the accounts with probably a need to consider whether to maximize withdrawal or to sometimes even hold back on withdrawal or to maximize withdrawal which is also partially already guided by the parameters and assumptions contained in the chart/table.

Last Edited: December 17, 2023   - and now a website to help to figure out these calculations and also a new thread by Bitmover.

This thread serves as an extension to the maintenance and liquidation portion of my BTC Investment ideas thread since some of the various Opening posts in that thread were starting to get overly cluttered and potentially confusing.

1)   This post:  Introduction (Opening Post 1):  
2)   Opening Post 2: Creating monthly withdrawal limits - based on the then BTC Spot price's direction and distance from the 200-week moving average, and of course a withdrawal rate and quantity of coins in the account
3)   Opening Post 3: Establishing price-based sell thresholds  - including potential buy back options (yes seeming to border on trading - but really could be considered as ways to insure the BTC holdings from inevitable volatility
4)   Opening Post 4:  Reserved - still to be determined

I am hoping that some of these ideas will be helpful to others, besides me and maybe helpful for institutions and/or governments too.  

Anyone have any suggestions, questions or similar ideas that they would like to share in this thread?  Please do.  

Even though I made this as a self-moderated thread, I am open to attempts to critique the various ideas or investment frameworks herein, but at my discretion I may delete posts that I determine to devolve too much into personal attacks (without seeming to provide adequate substance), shitcoin pumpening, bitcoin naysaying (that largely appears to me to be backhanded ways to shill some kind of a shitcoin) trolling or shilling.  

I would like to NOT delete many if any posts, but let’s see how it goes.

Last Edited: December 17, 2023