[edited out]
I also liked the way you separated the phases into accumulation, maintenance, and liquidation, this made the whole concept easier to understand because each phase comes with a different mindset and different priorities. By the time someone reaches the liquidation stage, the pressure to keep buying back every dip may no longer even exist anymore because the original goal has already been achieved.
So honestly, your write-up already explained the concept very well on its own, Arigato.
I will mention that the liquidation phase could be one in which a person plans to completely cash out of their bitcoin over a certain period of time, and end up as a no coiner or it could be a phase in which a person is merely ongoingly shaving off a certain quantity of bitcoin in a sustainable withdrawal kind of way. Sustainable withdrawal may well entail making sure that the withdrawal amount (in terms of dollars) is not greater than the amount that the bitcoin holdings are continuing to grow.
So in dollar value the whole bitcoin are growing faster than the amount being withdrawn.
So for example, I theorize that,
right now, a person with at least 13.1002 BTC could withdraw $80k per year with a 7% raise in his withdraw rate each year forever and ever and ever. And, surely if such person withdraws at the maximum of his withdrawal rate, then he may well end up making mistakes and withdrawing more BTC than his bitcoin holdings would be able to sustain. One way of dealing with the uncertainty would be to withdraw at a lesser amount (such as at $60k per year), another way would be delay withdrawal until such a time that the amount of BTC would more comfortably sustain the $80k per year withdrawal rate, and another way would be to grow the bitcoin holdings to a higher amount, such as if the holding amount were to be 20 BTC, then surely, there is plenty of BTC quantity cushion (something like 50% extra BTC) to provide comfort that the chosen withdrawal rate would be sustainable in the way that it is calculated to be.
The only way to succeed in a volatile asset like Bitcoin is to follow the DCA (Dollar-Cost Averaging) strategy.
Take it easy man, i personally wouldn’t say DCA is automatically the best strategy in every single situation. Let’s look at lump sum investing for instance, there are definitely moments where lump-sum investing can outperform DCA.
For example, if someone had a decent amount of money available during a major bear market or after a heavy crash, spreading that money too slowly through DCA could actually reduce their upside compared to buying aggressively at those lower prices.Another mistake most people make is thinking that because you’re using DCA strategy in your bitcoin investment, then the volatility will suddenly disappear, lol that person is a joker if they think this way, if bitcoin drops hard, you must definitely feel the impact regardless of wether you use DCA or not. The advantage that DCA has in this kind of situation is that it will help ease the psychological impact of the crashes on you because your buys were spread across different price levels instead of entering at once.
So personally, I see DCA more as a practical and sustainable approach rather than some perfect strategy that will always guarantee success. For most long-term investors, it’s probably one of the safest ways to stay consistent without stressing too much about market timing, but combining DCA
with occasional lump-sum buys during strong dips can sometimes be an even better balance.Lump sum and buying the dip are different strategies, and they do not need to be thought of in terms of combination in order to be understood as being profitable.
Lump sum tends to reflect an idea of either getting or already having a lot of money that is available to be able to be used to buy bitcoin. So if the money is available, then there is a question of why not use it to buy bitcoin right away rather than deferring such buys (such as using DCA). So the advantage might come from buying right away, especially if the price ends up going up over the period that the DCA would otherwise apply. The same is true whether someone comes to bitcoin as a brand new investor and he had already decided to invest in bitcoin, yet he is trying to determine the extent to which he should use money that he already has available to buy bitcoin right away or to spread his bitcoin buys over some designated period of time.
People will frequently think about DCA as a form of delayed buying of bitcoin, yet it is not really necessarily employed in a way that is delayed, since a person who might be trying to be as aggressive as they can with their ongoing bitcoin buys, they may well be buying as much bitcoin as they are able to buy as soon as the money comes available, so that is not really delaying in buying since they are not really able to reasonably buy bitcoin until they are sure that they have the money as being available.
[edited out]
.......
I like the point you made about how strategy can change over time, in the beginning a person might feel far from their target and then because of that, they might decide to buy aggressively. But after spending years accumulating through different market cycles, they may eventually reach a stage where they feel more comfortable with the size of their holdings and become less aggressive.
And the funny thing is that there’s rarely a clear moment where someone says “Okay, this is enough Bitcoin forever.” As a person’s income grows, their responsibilities begin to change, and so does their conviction too, so now they keep reassessing what “enough” even means for them.
I think that people can get to the point of having enough or more than enough bitcoin, yet of course, getting to such a status remains a combination of how much value is put in, and also how the bitcoin price performs during the period that the money was put in and also at later points in time.
Honestly the question about when is it enough as to stop accumulating has not been really answered. by my understanding bitcoin accumulation is just relatively proportionally to you income but we can’t say it’s enough because the standards keeps increasing, target change over time. those who had acquired bitcoin some years back never stop buying, what I think about bitcoin is that there is no such time when we can say it’s enough and I am not acquiring again. what one needs to do is to make use of the opportunity that presents it self to. also take time to spend part of your profit because the end goal is to have a good life. And keep raising the bar.
Yes, of course, we can all have goals to "have a good life," which justifies spending bitcoin, potentially even spending too much too soon in regards too the accumulated amount, the accumulation process and setting accumulation targets that likely will change because the unit of measure (whether the dollar or any other fiat) is constantly debasing at such a rate that our heads tend to be ongoingly spinning in terms of trying to fathom how we are going to keep up with such ongoing debasement.
It could be the case that you, Livingleged, also don't understand that bitcoin has abilities, possibilities and even a history in which its growth in value has outpaced the debasement of the dollar and other fiat currencies.
Let's say that a 35 year old guy with a $30k per year income started buying bitcoin at the beginning of 2016, and he used around $8k of his then $50k savings (various investments that he had been making in the prior 10 years), so his initial purchase of bitcoin ended up being spread out between January 2016 and June 2016, and he bought 18.155 bitcoin over those first 6 months of investing into bitcoin.
Thereafter, he reduced his bitcoin investment amount to $50 per week and he continued to invest into his other investments at $50 per week. So in the subsequent nearly 10 years, he invested an additional $26k and he accumulated about 4.7 BTC.
Therefore right now, the guy would be in his mid-40s, and his bitcoin stash would be right around 22.855, which seems more than enough to support his $30k income, even if his income (or his expected life style) had gone up,
right now a 22.855 BTC bitcoin income, his bitcoin quantity would support an income of nearly $140k per year with an increase of 7% in the dollar amount each year forever and ever and ever.
So why would any of us conclude that this particular guys does not have enough bitcoin, based on his having had started from a $30k income and consistently accumulating bitcoin over 10.5 years. The fact of the matter is that this hypothetical guy could have had probably quit his job much earlier based on how his BTC stash had progressed and also based on how the value of the bitcoin had gone up over the years, including if we use the 200-WMA to valuate his bitcoin holdings and to figure out how much dollar value could start to be sustainably withdrawn.
[edited out]
Once a over accumulation is reach what follows is maintenance phase. This is when you protect your holdings and try to maintain a stable portfolio so you don't lose what you have already built because you want to live a good life.
For sure, the larger our bitcoin holdings, then the more we have to figure out ways of protecting our bitcoin stash, even if we might start to sell some of our bitcoin in a sustainable way from time to time.. and so far in bitcoin's history, there can be ways to figure out how to sell some bitcoin within boundaries that the value of the bitcoin continue to go up faster than our sell amounts..and it might not be clear exactly when we might feel that we had gone through our accumulation phase, reached our maintenance phase (which as the name suggests may well not involve net sales or buys), and then a point where we might start to sell some of our holdings.
