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"I also like the idea of simply DCA out of Bitcoin"

I've done a lot of back testing on this and my tests indicate dca'ng out expenses over 4 years would leave me with considerably less bitcoin than assessing 4 years expenses and drawing down the whole 4 year year expenses.

I don't set price targets, I plan on dates, I've done back testing on the difference and it's difficult to plan on prices when drawing down expenses. Prices have a habit of destroying strategies. IMHO

Jake Woodhouse 1y ago

Thanks for sharing. It's interesting. There's also good analysis that shows a one off smash buy is often the way to go vs DCA into Bitcoin.

I haven't overly focused on DCA out, but your analysis instinctively is sound, so a lumpsum to then live off makes sense. If one is sophisticated enough to call the top vs the bottom of course

The DCA out I had in mind was sporadic, without a set total amount, so I tend to prefer being long Bitcoin instead.

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Discussion

hodloncomrades 1y ago

"If one is sophisticated enough to call the top vs the bottom of course"

I'm certainly not sophisticated enough, I go with the value of the bitcoin at the time of four year drawdown of expenses.

My strategy is based on an assumption bitcoin will produce an AAR/CAGR of a minimum 20% for the foreseeable future. (if it can't do that, maybe it's not what we think it is) time will tell, but we have to back our own judgement.

Another assumption I hold is bitcoin may dip 80%, (it might, who knows)

Say my annual expenses are $50k yr, so over 4 years $200k which I need to draw down in advance.

I'll be conservative with a 10% buffer on the 80%, so my stack needs to reach a value of $2M

So my strategy is not about tops or bottoms, but the value in fiat of the stack.

If I draw down 10% and my balance CONTINUES to gain 20% AAR/CAGR I could live forever and never run out of money.

There are tweaks for assumed inflation going forward and emergency drawdowns that I have in my model.

I'd be happy to take this chance.

I just don't understand how a strategy based on tops and bottoms can be operated with confidence with such a volatile asset. But I'm willing to listen to any explanation of a logical strategy based on price.

Jake Woodhouse 1y ago

I know of a few people that have technical skills they not only trust, but also use, in order to trade in and out of Bitcoin over a multi-year time horizon

But it's certainly not easy

The issue with the approach of simply taking a timeline is what happens if the bull/bear market cycle trend gets broken? Could we never have a bear market again?

Personally I think the fact we have programmed scarcity will mean we see a consistent inflation and deflation

No doubt though, taking some profits when you've made a good gain, in an size that means you don't need to take any more for 4 years, is a great bet