That's the advantage of using a percentage-based withdrawal, with whatever level of conservative/aggression your tastes demand.

Because we've recently gone parabolic, I've personally started using this format, but putting rebuys, proportional to each sell, below each normally finalized sale.

As an example:
You sell 10 Bitcoins at $100.
Rebuy 4 Bitcoins at $90
Rebuy 3 Bitcoins at $80
Rebuy 2 Bitcoins at $50
Rebuy 1 Bitcoin at $33

This way, without knowing how far up the parabolic rise will go before the inevitable correction, consolidation, and finding of new equilibrium.
You'll never have sold more than you were willing to ultimately part with.
All your rebuys will be for a net gain of Bitcoins.
The weakness is that you'll leave money on the table - there is virtually no chance such a system will maximize profits...but that is not the goal.

The advantage? When the instigating event - whatever it may be - causes the crash to occur...all your rebuys will be in place, and according to a pre-planned, controlled method.  You will not be hostage to the inability to change your order book for hours at a time - something that occurred both in the April crash, and most recently, for a few hours on our good friend Gox.

I made a spreadsheet (linked to from this thread) that lets you play around with the short-term and long-term impacts of various cash-out strategies on the way up.

I use it to the withdrawal percentages at which I don't need to lose sleep over the short-term movements of Bitcoin price, nor the long-term impact of a total collapse, or insane success.

Thread conversation seemed to gravitate towards tax implications and the broader notion of wealth management. That's a layer above the intent of the thread and spreadsheet, so I feel compelled to add: Due your own diligence regarding the tax implications of your selling strategy.

I fully agree, odolvlobo. That's why I said:


I was trying to keep the example simple so the post could focus on one point: That those premiums, while potentially higher or lower than initial offering price - are measured and evaluated in terms of BTC, and not USD.  Exploring the reasons why those premiums might increase or decrease, while remaining in terms of BTC...I see that as a separate but equally fascinating topic to explore.

TL;DR:I theorize the existence of any collectible market relies on premiums being attached to the commodity upon which they are based. In this case, casascius coins premiums will be measured in terms of BTC, not USD.

I've resisted thinking of it in terms of a premium that in any way ties to USD. Doing that would make these coins an anti-investment - given an upward price of the commodity upon which the coins are based, one would always have more worth by investing in the raw form of Bitcoins than in investing in the coins. 

A simple example, presuming a meteoric rise in BTC price from $10 to $1000. Two investors each put $1000 into Bitcoin, one buying casascius coins, the other buying electronically-stored Bitcoins.

Joe buys 100 Bitcoins at $10 apiece. For simplicity, say Bitcoin spot is at $5, and $5 was a premium for the coin.
Jane uses the same $1000, but buys 200 Bitcoins and puts them in a market.

Bitcoin goes from spot of $5 to spot of $1000.

Joe has 100 Bitcoins with a spot value of $100,000. Plus a premium of
Jane has 200 Bitcoins with a spot value of $200,000.

So the question remains - what is the premium? Possibilities:
A) A fixed USD premium. Joe paid a $5 premium when he bought them, that same premium remains.
B) A fixed BTC premium. Joe paid a 1.0 BTC premium when he bought them, that same premium remains.


Looking at each scenario:
A)
Joe's adds $5 for each of his 100 BTC, taking his $100,000 in spot up to a net value of $100,500.
Jane adds $0 for each of her 200 BTC, taking her $200,000 in spot up to a net value of $200,000.

B)
Joe's adds $1000 for each of his 100 BTC, taking his $100,000 in spot up to a net value of $200,000.
Jane adds $0 for each of her 200 BTC, taking her $200,000 in spot up to a net value of $200,000.

In short, A) is not how a collectible market behaves. If it were, it would not be a collectible market - it would be an anti-collectible market. You only make gains if the underlying commodity decreases in value.  Compare 100-year trends of gold spot vs. rare gold coins, or diamonds carat value vs. rarer quality/size specimens.

With the simple example, in B) we see Joe and Jane coming out exactly equal.
Whether in the long run Joe's value comes out ahead of or behind Jane has to do with any change in BTC premiums in the secondary market.
Whether those premiums are higher or lower than the original premiums that Mike offers will be purely driven by whether future investors perceive a greater value.

I strongly suspect Mike is keenly aware of this.  In the same line of thinking, if he were to lower the premiums on his offerings, this would create a disincentive to buy today - and an incentive to buy later.  That doesn't foster growth in a collectible market - it motivates everyone to dump their coins.

There's a whole 'nother layer that looks at whether BTC premiums scale additively or multiplicatively.  And some details around how as prices rise, older coins price themselves out of the general collectible market, enter a dead zone, then will re-emerge in the elite collectible market, with a different investor base representing the buyers.  But they're just that - theories.  Ultimately, it will be the behavior of us, the buyers and sellers of these coins, that define the market, and its behavior.

I cringe when I see people that are sitting on gold mines - early, high-end collectible coins - dumping them for fear that model A) represents the future, and they're better off converting to plain BTC before they lose out.  This question that S3052 asked - it gets visited in nearly every coin transaction I conduct.  I'm hoping to get these concepts out there, so that current holders won't release their coins to new holders, based purely on fear and a lack of information/collectible market behavior.

If this seems off-topic for this thread, I apologize. It has long struck me as the largest piece of misunderstood data standing in the way of the collectible bitcoin market absolutely taking off.  If this does seem on-topic, I'd highly value the thoughts of others, especially Mike.

You're quite welcome! Always happy to help.

As Otoh said, ANACS is the agency that grades these coins.  PCGS and NGC are the leading coin grading agencies, ANACS is generally considered third-in-line.  The premier agencies didn't want to grade Bitcoins, so ANACS gets all the business 

The general idea is that they are an independent third-party whose only job is to provide a rather standardized way of grading the quality of the coins sent in.  Especially as you get into higher-value collectibles, this becomes increasingly important.  By buying a graded coin, you can trust the reputation of the grading agency to offset some of the risk of a counterfeit or low quality coin.

Nightowlace gets this, and has grading lined up with ANACS, so purchasing through him is a low risk, convenient way to get some high quality coins without having to do a lot more homework, in a field you likely don't have the same experience that he does.  I'll also add that his packaging, customer service, and follow-through are top notch.  You get what you pay for.

As for your current holdings...you'll probably have trouble fetching 8 for an ungraded, but the people that have the best luck:
-Create their own thread outlining what is being offered (error or not, quality of coin)
-Include front-and-back pictures
-Lay out any ambiguous terms (is shipping included? Is stated price negotiable? Pre-empty any questions)

Along with this, if you care to, you can include an offering in this collectible marketplace thread, which links to your offering. You'll get a good idea of what offerings, graded and ungraded, of some of the rarer varieties of coins have sold for in the past.

Even though it's not a holo error, it is rare (and expensive) enough it would fit in the Collectible Marketplace thread, if you'd like to add it.

It would help give a better understanding of relative rarities.
I did a crude count, and there were about 830 25 BTC made in total, of which only 604 remain active.
A far smaller population (a bit over 200) were of the holo variety.

I would just ask that if you do post it, that you use the same format as elsewhere in the thread, and make sure to call out (as you did here) that it is not a holo error variety.

Good luck!

Absolutely! Though I think people will be more excited that Chaang has joined the thread and made his wares available.

I'll shoot you a PM. Provided all the details verify, I'll take the buyout on all 3 of the 1 BTC coins - 9 BTC for the 3 of them.

Amazing you would post this today - thanks for the link.

My personal implementation/usage of the spreadsheet, that is precisely what I'm pondering right now.  My two criterion are different...but the concept remains the same.
If I am long-term bullish on Bitcoin, and I'll only take a life-changing action at certain price points, then it makes sense to defer or lump all sales up to that price point.  This further pushing out of the sales might be of benefit from a tax standpoint, and absolutely is of benefit from the number of Bitcoins that remain in your wallet post-sale.

This topic has been visited a fair number of times.

Stock splits change the perceived public value of a stock.

There's a lot of supporters waiting to pressure exchanges to switch to a mBTC format, for this very reason.
With this current rally, that day will be fast approaching.

A price of $0.262/mBTC doesn't look so daunting now, does it?

Finally!

This means the market perception of Gox's failure likelihood has now reduced from 5-10% down to 0%, right? 

This has been a great discussion. (And I hope it's just getting started!)

I think of this sheet as a planning tool for bitcoin withdrawals.
I consider shorter-term trading as a layer below that.
I consider wealth management planning as a layer above.

For those that consider all these layers, it is absolutely true that any withdrawals made must be in line with the overarching wealth management plan.

There hasn't been a ton of public thought and discussion on the wealth management aspect.  (I made the mistake of trying to offer that when I was still a newbie, and it didn't go so well.)  So, while the focus of this thread has gone in a bit of a different direction that I had originally intended, it's certainly been enlightening and enjoyable to absorb.

While most of us around here tend to be long-term bullish on Bitcoin’s future, nobody knows for certain what its value will be in one year, five years, or ten years.  With an investment where the upside potential is easily hundred-fold, and the downside risk is one-fold (100% of your original investment),deciding how much to withdraw on the way up can be a torturous problem.

The ultimate goal is to find your personal balance between these two questions:

-If Bitcoin goes to $0 tomorrow, will I be able to live with the gains I locked in up to this point?
-If Bitcoin firmly establishes itself, reaching global equilibrium with other currencies, will I be able to live with the number of Bitcoins I sold along the way?

I use a spreadsheet to help play around with different withdrawal amounts. Its general approach is this: For every X% Bitcoin appreciates in value, sell Y% of my remaining Bitcoins.  Adjusting X% controls the granularity – how often and sizable each transaction is.  Adjusting Y% controls how much profit is realized on the way up, rather than left for future gains.

If you'd like your sells to have potential rebuy points, you can go a bit further, and set up the Rebuy tab.  It will generate rebuys for each of your sell points.  If you keep it updated, it can serve as a good parity check to ensure your order book is correct, while guiding the bids and asks.

Feel free to adjust the numbers in the green boxes, and play around for yourself.  If you end up using it to track your funds, you'll want to make sure to make a personal copy first, and ensure your privacy settings are as you'd like them.  (Oh, and if you find a bug or mistake, please shoot me a PM!)

2017: Bitcoin Withdrawal Strategy

Mostly for posterity (for now at least), a link to the original spreadsheet:

Version 1 - https://docs.google.com/spreadsheet/ccc?key=0AqpoRK3q-_aKdHdwd0VubzdJbkQ5OF9GRlplVXRVY2c&usp=sharing
Version 2 - Bitcoin Withdrawal Strategy spreadsheet.

I don't think of this spreadsheet or plan as a trading strategy, such as entering and exiting the market based on movements above and below weighted averages. You could consider it a very long-term trading strategy whose aim is buy-and-hold, with the only trading done being to incrementally lock in gains at predefined price targets.  If you want to get creative, you could make a copy for your conservative long term withdrawals, and a separate copy, having far more aggressive rebuy targets for the trading portion of your portfolio.

Just know that this plan can exist for your long term planning, and you can still trade funds on a shorter time-frame, realizing BTC-based gains and losses along the way.

And of course, remember that your trading strategy must align with your broader-still investment strategy, consider tax implications, etc. That's not really the aim of this tool, or thread.  Here I hope to explore the various uses or strategies that people have found beneficial.  Hopefully people will be able to pick up a few new ideas that they can then evaluate and/or integrate into their trading approach.

If you follow pre-established buy and sell points rigidly, long-term you put yourself in a win-win situation.  If the price continues rising from its relative point, you will still hold the number of Bitcoins you are comfortable with, while holding profits.  If the price downturns after you have sold some long-term funds, you have a choice.  You can do nothing, and continue to keep your long-term profits locked in.  But you'll also have the choice of reinvesting at a lower price, gaining Bitcoins, while setting up to resell them once again at a predefined future sell price.

I hope some of you find it valuable!

So far, so good.  The relative shallowness of the dip, and the rapidity with which the market shrugged it off bodes very well.

I think you're referring to The proudhon song:
https://bitcointalk.org/index.php?topic=169548.0
http://www.youtube.com/watch?v=A7TuFy0fcuw

And of course there's the Bitcoin Rally Song:
https://bitcointalk.org/index.php?topic=168163.40
http://orymh.bandcamp.com/track/the-bitcoin-rally-song

With some luck, this thread will only be relevant for the next few days at most (11/5/2013).  I figured it was time to dust off my speculation cap. I proudly disclaim that I fall into the uber-bull camp.

With only one historical price benchmark left ($266 Gox ATH), we’re about to enter uncharted territory.  The market will be looking for any tea leaves it can find for clues about what will happen next.  Watch the behavior around $266 very closely.  There are four possible scenarios:

A) $266 proves to be significant resistance, with attempts to break through being met with an increased selling volume. (We have not seen this behavior to date on this rally.) Such resistance would once again provide a healthy consolidation phase and allow potential buyers to reload.
B) $266 proves to be significant resistance, and this scares a few folks into selling.  Right now, only 10,000 Bitcoins sold would take our price back down to $210.
C) $266 gets steadily eaten through over the course of hours or days. The strongest outcome. If this occurs, expect the rally to gain steam.
D) $266 gets blown through by an impulsive move, most likely a high-volume buy.  If this occurs, there is a higher likelihood for a head-fake.  It will be hardest to know the long-term outcome in this case. I speculate the most likely is a pop above, a high-volume sell-off that follows (with the aim of loosening more bitcoins).  When the rally resumes, it will be violent and without warning.

If you're day trading, I’d suggest having a pre-existing plan in place for each scenario.  Here, minutes will matter.

As for likelihoods and timeframes, I predict we'll encounter B) within a day. After between 1 and 3 failed breakthroughs, D) occurs.

<-- also interested. If it is above 5, then to my knowledge you've broken the record for highest 1 BTC ungraded holo error:
https://bitcointalk.org/index.php?topic=214589

I'd love to update the 'price guide' section of the thread.  Increasing, publicly-known transactions are healthy to the growth and stability of the collectible bitcoin market.

Congratulations on the sale!

EDIT: Looks like it fell short of the record. The Collectible Marketplace thread has been updated to include this sale in its history.

That song was most excellent  


I think we have you and your loud speakers to thank.  China must have heard the song, as they've now overtaken volume and have overtaken btc-e and bitstamp's prices.