I was thinking about the following hypothetical the other day:
Let's assume that bitcoin goes to 100-300K (let's say, 200K average) this cycle and somewhere along the line you sell a substantial % to invest in property, luxuries, etc ( whichever you choose).
In 10 years afterwards, bitcoin goes to 5 mil, which means that you only "captured" just 4% of the potential value.
How would you feel about it? I guess, it would also depend on the remainder (that you didn't sell), but still.
Personally, I know that years later, I am not particularly fond of my decisions to sell AMZN, AAPL and TSLA early, even though I made very nice gains on them.
Sometimes, I consider these occurancies as my investment follies, but, again, you cannot be 100% efficient.
Of course, it is possible to NEVER sell btc and, basically, put this decision on the shoulders of descendants, but you cannot guarantee that they would be wise about it, right?
At least, I can't.
At some point, I would have to start to spend btc and this point is coming relatively soon.
Alas, to spend even a relatively small amount of btc on things like kitchen remodeling causes a bit of mixed feelings on my part as I contemplate the scenarios described above.
That could be one expensive kitchen 5-10 years down the road.
Withdrawals from IRA are taxable and I put all my stables back into the market during 2023.
I would probably do a mix of "things", but don't want to take on HELOC or anything like this.
Decisions, decisions...
Read/listen to the book 'Die with Zero' - Bill Perkins. Working for money (or in our case, waiting for Bitcoin to go up) is a trade-off against your only real asset your life time.
Memories and experiences you have earlier in your life have greater value than the ones you have later because of the benefits they give after you have had them. Sharing and using, wisdom and memories both have significant value to your overall life happiness. (I think travel experiences often give great returns.).
Think about your grandparents, as you grow older, you will end up wanting less and are happy to stay at home, in fact, health issues mean you probably can't travel easily anymore, and this is when those earlier 'experience' investments in your life reach maturity. Bizarrely, living in the moment is an investment in your future. So the earlier you have these experiences the greater the return.
Dying with zero doesn't mean forgetting about looking after dependents or risking running out of money, but it helped me think about getting the correct balance between living in the moment and thinking longer term.
In the case of Bitcoin, for me it was about setting very ambitious objectives about the things I wanted (property, cars etc, but whatever is reasonable to you with your current BTC holding) , and when Bitcoin was at a sufficient price, and I would still have at least 50% of my BTC remaining, I pulled the trigger. (actually, my trigger price was $42k, in the last bull cycle, and I part-exited at $55K, and paid all the tax due.)
But I always live by, "Never have no Bitcoin."
Of course, you have to choose for yourself how many bitcoin to sell, but it does seem that you are likely selling way too many bitcoin too soon.. .especially since you caould probably get to a certain stash size and then just sell 10% per year forever and never run out and also never have fewer dollar value in terms of what the BTC is worth..
So to me it seems better to get to a certain level of BTC and then if you are happy with that quantity, then go into a perpetual cycle of celling 10% per year, and sure maybe you could even do 1% per month (which would be 12% per year) if you want it to be a round number, and you will probably still be o.k.. with a bitcoin stash that is forever increasing in terms of its dollar amount.
So then the question would be how much value do you need in bitcoin in order to start? Depends on how much monthly salary that you want.. so if you go with 12% per year then $667k would be enough which is merely 20.1 BTC right now.. which pretty much perpetually get you $6,666 per month of income. Calculate with
this.I think that is much better than cashing out too many BTC too soon.. especially the best asset known to mankind... so you probably fucked up by selling so many.,. .. but hey whatever you do you.
You can back test it if you like. .. but you have to start with the right premises and valuating your stash based on the 200-WMA in terms of figuring out your budget, and right now 20 BTC is ONLY worth $663k according to the 200-WMa, and 5 years ago, you would have had needed 191 BTC to be at the equivalent 200WMA valuation, and so if you had spent 191 BTC at 10% per year, right now you would still have around 75.3 BTC, so you would have had kept your value by spending 10% per year, and if you had done the max 10% withdrawal for that whole time, you would have had withdrawn close to $2 million in value during that time... and your remaining stash BTC would be even more valuable (in terms of dollars) than they were when you started.
When I looked at the past data I came up taking 20-25% in a bull year for 4yr future period. So sort of in that 4-6%/yr range. The main reason I went this way is because of the variance in % withdrawal required when you do it annually(or monthly etc) You could end up withdrawing more, like closer to 8-9%/yr. I’m still playing around with my data tho.
Stash size is a consideration for sure though ;-) For sure you have to get to a certain stash size prior to starting.. and using the 200-WMA to figure out your values.. so for sure I am thinking 10% to 12% is actually sustainable once you get to a large enough stash size.. that you are comfortable.. .. 12% withdrawal would require at least a 20.1 BTC stash size which would be a $6,666 per month target withdrawal rate... nothing wrong with starting out more conservative to make sure and also to be careful withdrawing as much if the BTC price starts to drop below 25% above the 200-WMA.. As I attempt to outline some parameters in
my sustainable withdrawal tool powered by bitmover.
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