The funnel as price rises

[Bitlend]

Assuming Bitcoin heads to lets say $10,000 early next year.

Say im holding 100 BTC.

Im then sitting on potentially $1,000,000.

The issue then is, how to get it out?

As the price rises, the ability to "get out" decreases unless a) the buying volume continues to increase and b) An exchange can handle such a sale.

It seems MtGox for example already has a limit on cash out I believe at $50,000.

That means you have to wait around 20 days and have 20 withdrawals at a minimum.

That also means you could potentially sell all 100 BTC in one day (buyers permitting) but then have to sit there and rely upon an Mtgox to send you your funds over 20 days.

Enough people trying to do the same thing, and your reliance levels upon Mtgox to deliver becomes very scary.

As more sellers need to or want to do this, simply to take some profit off the table if nothing else, the funnel will get exponentially smaller.


I guess the exchanges will adapt and increase their withdrawal limits over time, however I noticed Mtgox actually reduced theirs recently?

Is there a limit on all exchanges, if I had $1m worth of BTC today, do any of the exchanges enable me to cashout such an amount?




 

[jubalix]

hmmm good point any takers

I thin gox has a limit of 50k a month...unless you get an aposilte

bitstamp?

kraken?

[djalexr]

why exchange for dollars at all? afterall, a value of 10K would presumably entail a great deal more of merchant acceptance, etc... than we currently have - you could just buy with bitcoins whatever it was you were planning to spend the dollars on.

and if you did decide to cash out, why on earth would you want to do it all at once like that?! i'd take my time about it, and also hold onto some of them, the price could go up further if it had got that far!

It seems like some people have a bit of an obsession with cashing out at certain price points, overlooking the fact that for it to get to those price points, there must still be good reasons to keep your money IN bitcoin...i.e inflating fiat currencies, it's increased confidence and acceptance as a transferable, secure store of wealth a bit like gold etc...

[jubalix]

well he might want to lock in a gain or needs to buy something!

so still a very valid question

[ahfs6298]

interesting, I do think this could be a bit of a problem for people holding large quantitys of btc, but otherwise for most people with about 1-10 btc this would not be much of a problem (as long as they do not want to instantly withdraw all in one go), I would simply assume that you would probably only withdraw as much as you need ($0.5k-10k)for a (rather expensive) holiday.

Depends on where you want to go for a holiday though

[joesmoe2012]

You can get much higher limits with MtGox (and most exchanges around) by simply asking for them (and demonstrating a need).

Just additional KYC paperwork that needs be filled out by the exchange (assuming the even maintain this KYC paperwork).

[cr1776]

Pay off a mortgage denominated in dollars, euros, yen etc.  Start a business etc.

well he might want to lock in a gain or needs to buy something!

so still a very valid question

[jballs]

I believe the bulk of those  already in are not intending to ever cash out. It's an all in no limit bet on everyone in the world taking bitcoins instead of or in addition to fiat.

Those coming in now will be speculating but in smaller amounts, a million USD now buys a 1,000 btc instead of a million of them. So that side of the funnel is narrowing also.

If I were in that position you described I would scale out of the position slowly an steadily, leave 20% for if it lives on and be plenty alright with that outcome.

You will probably see this thing go beyond anyone's expectations, though the exchanges are the very worst part of the system. I imagine it will get worked out as more money is at stake.

But yes, scaling out before the blow off top is mandatory, from a purely risk management perspective.

[Sindelar1938]

or do lots of small trades thru localbitcoin

if you wanted to go legit, deposit in a bank and prove timing of sale by using the blockchain timestamp

[jubalix]

I believe the bulk of those  already in are not intending to ever cash out. It's an all in no limit bet on everyone in the world taking bitcoins instead of or in addition to fiat.

Those coming in now will be speculating but in smaller amounts, a million USD now buys a 1,000 btc instead of a million of them. So that side of the funnel is narrowing also.

If I were in that position you described I would scale out of the position slowly an steadily, leave 20% for if it lives on and be plenty alright with that outcome.

You will probably see this thing go beyond anyone's expectations, though the exchanges are the very worst part of the system. I imagine it will get worked out as more money is at stake.

But yes, scaling out before the blow off top is mandatory, from a purely risk management perspective.

But what I think is asymmetric is almost every exchange can take an unlimited amount of money in, eg Gox still says you can send as much money as you want in, no limit, but severely limits getting this out. How can a bank whom ever the exchange use act in this asymmetric way, if they have the ability to accept unlimited funds, then they should be able to remit unlimited funds. Something here does not add up

[Elwar]

The biggest problem there is the amount of taxes you would have to pay if you took out $1 million.

[jubalix]

The biggest problem there is the amount of taxes you would have to pay if you took out $1 million.

realize your gains in capital gains tax free jurisdiction

[Elwar]

The biggest problem there is the amount of taxes you would have to pay if you took out $1 million.

realize your gains in capital gains tax free jurisdiction

Doesn't work if you're an American citizen.

[PrymeTyme]

A Wild guess...

If BTC is worth 10K a Pop , the Banks are involved aswell..
Therfore no Need to Cash out at MTGOX..

Just visit your local Bankster and sell em some coins...

[jballs]

I believe the bulk of those  already in are not intending to ever cash out. It's an all in no limit bet on everyone in the world taking bitcoins instead of or in addition to fiat.

Those coming in now will be speculating but in smaller amounts, a million USD now buys a 1,000 btc instead of a million of them. So that side of the funnel is narrowing also.

If I were in that position you described I would scale out of the position slowly an steadily, leave 20% for if it lives on and be plenty alright with that outcome.

You will probably see this thing go beyond anyone's expectations, though the exchanges are the very worst part of the system. I imagine it will get worked out as more money is at stake.

But yes, scaling out before the blow off top is mandatory, from a purely risk management perspective.

But what I think is asymmetric is almost every exchange can take an unlimited amount of money in, eg Gox still says you can send as much money as you ant in, no limit, but severely limits getting this out. How can a bank whover they use act in this asymmetric way, if they have the ability to accept unlimited funds, then they should be able to remit unlimited funds. Something here does not add up

You are asking the same questions as I am, I am more comfortable with the secondary market for that reason, localbitcoin. They are camping on 3 months of outbound cash so they are not left holding a bag if the music stops. It's a yellow flag, had I bought them cheap I would ignore it, sending 100 grand into that situation at this point for 100 coins... no fuckin' way.

[Siegfried]

The biggest problem there is the amount of taxes you would have to pay if you took out $1 million.

realize your gains in capital gains tax free jurisdiction

What's your recommended jurisdiction?

[jballs]

The biggest problem there is the amount of taxes you would have to pay if you took out $1 million.

realize your gains in capital gains tax free jurisdiction

What's your recommended jurisdiction?

It depends on where you are from. If you are a yankee you can never get out, unless you relinquish your citizenship. That's more common than it used to be but still a pretty big decision for most. You can keep the cap gains down to 15% if you stay in a poverty earned income bracket for the year you withdraw/monetize the btc. You can live pretty good in Belize on a poverty income for that year, so I recommend that jurisdiction. I recommend that jurisdiction for pretty much everything though. Because it rocks. If you want to void your citizenship (and are a yankee currently), Singapore has favorable tax laws, as does Switzerland.

This might be the best strategic route though-

http://business.financialpost.com/2013/03/11/puerto-ricos-no-capital-gains-tax-luring-wealthy-americans/

Let us know how it goes, maybe see you in Belize...

[LiteCoinGuy]

Use several exchanges.

But we wont see 10k at the begin of next year

[Hawker]

If you get an apostille, the gox limit is $500k per month.

An apostille costs £136 in the UK. 

Gox is slow though.  If you need the money right now, Bitcoin is more like a house than a share in that you need time to bank the proceeds of sale.

[jubalix]

The biggest problem there is the amount of taxes you would have to pay if you took out $1 million.

realize your gains in capital gains tax free jurisdiction

What's your recommended jurisdiction?

It depends on where you are from. If you are a yankee you can never get out, unless you relinquish your citizenship. That's more common than it used to be but still a pretty big decision for most. You can keep the cap gains down to 15% if you stay in a poverty earned income bracket for the year you withdraw/monetize the btc. You can live pretty good in Belize on a poverty income for that year, so I recommend that jurisdiction. I recommend that jurisdiction for pretty much everything though. Because it rocks. If you want to void your citizenship (and are a yankee currently), Singapore has favorable tax laws, as does Switzerland.

This might be the best strategic route though-

http://business.financialpost.com/2013/03/11/puerto-ricos-no-capital-gains-tax-luring-wealthy-americans/

Let us know how it goes, maybe see you in Belize...

new zealand