JJG's Bitcoin Investment Ideas (Sustainable Withdrawal / Portfolio Maintenance)

[JayJuanGee]

And, how about you MusaMohamed?  You are still accumulating bitcoin?  Are you playing around with trading it (and that is why you are thinking in terms of the potential applicability of technical analysis and fundamental analysis?)?  Or perhaps you are not completely convinced in regards to bitcoin as a long term investment in which we might consider holding such asset through all of our lives rather than fucking around trying to trade it (or thinking that getting in and out of it is a good way to try to manage our holding of it?)?

I don't do that, as with me, after I understood about Bitcoin fundamentals, I no longer have need of doing technical analysis but for people who want to do that but with wide view, 200WMA can be helpful for them, I meant so in that post.

With a good investment asset like Bitcoin, let's act simply by focusing on accumulation bitcoins with time. The more time you can do accumulation, the more satoshis you stack. Then by holding your satoshis a longer time, your wealth will be improved and your life quality would be better too.

Stick with technical analysis and trading only causes unnecessary tasks, more pressure and more possibly losses, I understood it.

Surely, I don't mind talking about the bitcoin accumulation process, which you seem to be doing which is also not really what this thread is meant to be about - even though sometimes we might still need to refer to how we might have had gotten to a status in which either price based sustainable withdrawal and/or time-based sustainable withdrawal might start to be justified and justifiable.. which from my own framing it seems better to get to some variation of overaccumulation status before starting to employ either price-based sustainable withdrawal or time-based sustainable withdrawal.

I also recognize that some guys who are investing in bitcoin might not completely graduate from always considering themselves as being in accumulation status, since the stages of 1) accumulation, 2) maintenance and/or 3) sustainable withdrawal will frequently have overlapping aspects and surely individual circumstances might even contribute towards their never being able to reach some forms of meaningful sustainable withdrawal status.  

[samadam007]

And, how about you MusaMohamed?  You are still accumulating bitcoin?  Are you playing around with trading it (and that is why you are thinking in terms of the potential applicability of technical analysis and fundamental analysis?)?  Or perhaps you are not completely convinced in regards to bitcoin as a long term investment in which we might consider holding such asset through all of our lives rather than fucking around trying to trade it (or thinking that getting in and out of it is a good way to try to manage our holding of it?)?

I don't do that, as with me, after I understood about Bitcoin fundamentals, I no longer have need of doing technical analysis but for people who want to do that but with wide view, 200WMA can be helpful for them, I meant so in that post.

With a good investment asset like Bitcoin, let's act simply by focusing on accumulation bitcoins with time. The more time you can do accumulation, the more satoshis you stack. Then by holding your satoshis a longer time, your wealth will be improved and your life quality would be better too.

Stick with technical analysis and trading only causes unnecessary tasks, more pressure and more possibly losses, I understood it.

Surely, I don't mind talking about the bitcoin accumulation process, which you seem to be doing which is also not really what this thread is meant to be about - even though sometimes we might still need to refer to how we might have had gotten to a status in which either price based sustainable withdrawal and/or time-based sustainable withdrawal might start to be justified and justifiable.. which from my own framing it seems better to get to some variation of overaccumulation status before starting to employ either price-based sustainable withdrawal or time-based sustainable withdrawal.

I also recognize that some guys who are investing in bitcoin might not completely graduate from always considering themselves as being in accumulation status, since the stages of 1) accumulation, 2) maintenance and/or 3) sustainable withdrawal will frequently have overlapping aspects and surely individual circumstances might even contribute towards their never being able to reach some forms of meaningful sustainable withdrawal status.  

I agree. It makes sense to build up a strong Bitcoin position before thinking about withdrawing. The steps of saving, holding and withdrawing often overlap and everyone’s situation is different. Some people may never feel fully ready to stop accumulating and that’s perfectly fine

[JayJuanGee]

And, how about you MusaMohamed?  You are still accumulating bitcoin?  Are you playing around with trading it (and that is why you are thinking in terms of the potential applicability of technical analysis and fundamental analysis?)?  Or perhaps you are not completely convinced in regards to bitcoin as a long term investment in which we might consider holding such asset through all of our lives rather than fucking around trying to trade it (or thinking that getting in and out of it is a good way to try to manage our holding of it?)?

I don't do that, as with me, after I understood about Bitcoin fundamentals, I no longer have need of doing technical analysis but for people who want to do that but with wide view, 200WMA can be helpful for them, I meant so in that post.

With a good investment asset like Bitcoin, let's act simply by focusing on accumulation bitcoins with time. The more time you can do accumulation, the more satoshis you stack. Then by holding your satoshis a longer time, your wealth will be improved and your life quality would be better too.

Stick with technical analysis and trading only causes unnecessary tasks, more pressure and more possibly losses, I understood it.

Surely, I don't mind talking about the bitcoin accumulation process, which you seem to be doing which is also not really what this thread is meant to be about - even though sometimes we might still need to refer to how we might have had gotten to a status in which either price based sustainable withdrawal and/or time-based sustainable withdrawal might start to be justified and justifiable.. which from my own framing it seems better to get to some variation of overaccumulation status before starting to employ either price-based sustainable withdrawal or time-based sustainable withdrawal.

I also recognize that some guys who are investing in bitcoin might not completely graduate from always considering themselves as being in accumulation status, since the stages of 1) accumulation, 2) maintenance and/or 3) sustainable withdrawal will frequently have overlapping aspects and surely individual circumstances might even contribute towards their never being able to reach some forms of meaningful sustainable withdrawal status.  

I agree. It makes sense to build up a strong Bitcoin position before thinking about withdrawing. The steps of saving, holding and withdrawing often overlap and everyone’s situation is different. Some people may never feel fully ready to stop accumulating and that’s perfectly fine

To the extent that you are potentially a real person, I doubt that it is accurate to summarize my points like that samadam007. 

Since you are a newbie to the forum, it would probably be better if you were to figure out ways to ask questions or make some points to my thread specifically (are you in overaccumulation status?) and try to relate to some ideas within the context of your own experiences rather than trying to summarize in ways that convolute the ideas...

Surely I did not talk about whether or how saving (I usually don't really use that word.. even though it's in my vocabulary), holding (sounds like something to figure out if we might do it when we are working on getting to over accumulation status, yet not really something that I was speaking about in recent times - unless you got the context wrong?) and withdrawing (surely depends on whether we are talking about price-based sustainable withdrawal or time-based sustainable withdrawal - since I don't tend to talk about other ways of withdrawing that might include the depletion of principle. so maybe I am not even talking about withdrawing in any traditional sense, so which form of withdrawing were you thinking about samadam007?  or you were merely looking at my ideas from a theoretical perspective?).

[Wolf of One Street]

Opening Post 2:  Creating monthly withdrawal limits - based on the then BTC Spot price's direction and distance from the 200-week moving average, and of course a withdrawal rate and quantity of coins in the account

Ideas of sustainable withdrawal that attempts to measure monthly budget limits based BTC spot price relative to the 200-week moving average

There has been a while that I have been talking about a chart/table that I had been working on that attempts to guide monthly budgets within the parameters of the 200-week moving average.  Here's an example with two hypothetical accounts.. Account 1 and Account 2.^**



**An amended and improved version of the above chart eliminates the second Account, and shows the ongoing BTC Spot Price and the 200-week moving Average in order to show how they compare with one another.

From the above chart, you should be able to see that if there are two hypothetical accounts, and each of the accounts started out with 21 BTC in September 2022, and they have been experiencing withdrawals on a monthly basis.  The amount withdrawn each month should be less than the limits of their monthly withdrawal limits based on the various formulas therein that also peg to the 200-week moving average and also the limits are based on then balance in the account.

We can see that the actual 200-week moving average gets put into the spreadsheet in order to show the limits for the upcoming month.  In this case, I have projected the 200-week moving average to be $29,041 (K,3) within the first day or so of December 2023.  You can see the actual here.

 The spreadsheet autofills the various threshold BTC spot prices in row 3 in accordance with what percentage the BTC spot price is above or below the then 200-week moving average, as reflected in row 2.  

For example, to show the lowest Spot price on the chart (H,3 = $18,850), as long as the BTC price is above $18,850 but less than $20,300 (I, 3) (that is more than 30% below the 200-week moving average, but less than 35% below the 200-week moving average), then there is an authorization to ONLY spend 40% (H, 1 = 0.4) of the 200-week moving average monthly rate which based on the 4% per year, 1% per quarter or 0.33% per month which is also autofill calculated into the sheet (based on the 4% amount in L,3). So the monthly budget limit for that person would be 0.02744205 BTC (H, 20) (or $517.28 in H, 13).

In my model, the BTC spot price has to be 25% (M, 2) higher than the 200-week moving average (which is estimated to be more than $36,250 (M,3) at the beginning of December) before account 1 would be authorized to withdraw the full (M,1) 0.33% per month allocation (as the percentage that is authorized is depicted in row 1), so that would be authorized to spend up to 0.06860513 BTC (M,18 and M,20) for the month and right at around $2,486.94 (M,11 and M,13).

Another clarification that I should make is if the BTC price were to exceed the highest BTC spot price on the furthest left of Row 3 which would be $435, or higher (U,3), at the beginning of December, which is 1,400% higher ((U,2) than then 200-week moving average of $29,041 (K,3), then amount of authorization of BTC to withdraw is still the same (0.06860513 BTC for the month); however there is an authorization to withdraw and to cash out of BTC up to 60 months of the monthly limits in advance..which shows as 4.11630772 BTC (U,20)  (U,13 = $1,790,593.86).  

Of course once the BTC price gets 0.33% or higher above the 200, week moving average, then gradually the number of months that can be withdrawn in advance increases at various thresholds as reflected in the increases in the percentages above the 200-week moving average in row 3 starting from column N and going through column U.  And the number of months authorized to withdraw in advance are reflected in Row 1 and show greater than 1 month in advance starting from Column N at 2 months and Column U at 60 months.

My tentative thoughts is that it would be a preferred practice to cash out several months of the monthly authorization in advance under such conditions of BTC prices many multiples and/or multitudes above the 200-week moving average in order to expect that some of the higher multitudes of being that high above the 200-week moving average are not really sustainable... and we have seen that non-sustainability high spot BTC prices historically, even though we cannot really know in advance how far UP, how fast the BTC spot price might go up and/or how long it will last at various higher price thresholds.  

I speculate that as the BTC price is going up and if it reaches higher multiples above the 200-week moving average, we might still get anxious about selling additional BTC (beyond the monthly sales authorization), and so we might still end up selling a number of months of our BTC authorization in advance at lower BTC price  thresholds.  It seems to me that even if the BTC price were to go 200% above the 200 week moving average as reflected in Column Q, we might end up selling 12 months of our monthly authorization in advance, so it might seem that we could be precluded from selling any BTC for the next 11 months; however, if a few months later, the BTC price were to reach the thresholds in Column S, then it may be quite reasonable to sell an additional 24 months to reach the authorization of being able to sell 36 months in advance (S,1), so we can make those kinds of calculations in order to stay within our limits but not necessarily being overly penalized for selling early even though we would have been able to sell more for higher but we are still able to do it within some reasonable limitations that are still quite generous in terms of the amounts that we are able to sell in advance, and the same is true for getting into the higher BTC spot prices of Column T or Column U.  

If the BTC price reaches higher thresholds, there would be new authorization to sell additional months in advance based on the higher BTC spot price movement, and at the same time, we can continue to plug into our formula based on how much we had already sold and based on the 200-week moving average continuing to move up while the BTC spot price is moving up and the higher the BTC spot price is out of line with the 200-week moving average (and for longer that the BTC spot price stays high) then it will cause the 200-week moving average to get drug up faster and faster than it had been previously (and can be measured daily or whatever is ball-parkedly reasonable numbers to use in K,3).. .It can be measured here, too.

I understand that there is quite a bit of data in the charts and some of the ideas regarding the monthly spending limitations of the accounts are somewhat discretionary, but starting out by sticking with standard 4% per year withdrawal rates and even presume a kind of perpetual ability to withdraw BTC under this kind of system with a kind of underlying assumption that BTC prices (especially the 200-week moving average) will continue to go up at least 4% per year on average, so even if there are some down, years the account is not materially getting depleted in terms of its dollar values (or whatever other utility we might be measuring our cost of living).  I also realize that account 1 and account 2 are not very materially different from each other in terms of the current balance of the accounts, so maybe i could have had come up with some differences in which one of the accounts might have hade been maxing out the monthly budget limit and the other one was spending minimal levels.. Maybe a future version I will change them around a bit?

Any thoughts or feedback would be appreciated, or even some real life examples of trying to figure out these kinds of balances.  I am focused on BTC in this example, but of course, there could be various other assets that comprise someone's investment portfolio and maybe even cashflow, so surely I am not against any kinds of Gresham Law types of considerations in which there would likely be spending from other assets prior to spending from BTC, so if the accounts are not spent to the max of their limits, then whatever BTC remains would just continue to sit in the accounts with probably a need to consider whether to maximize withdrawal or to sometimes even hold back on withdrawal or to maximize withdrawal which is also partially already guided by the parameters and assumptions contained in the chart/table.

Last Edited: December 17, 2023   - and now a website to help to figure out these calculations and also a new thread by Bitmover.

Wow, seeing the charts in the table and the work flow of spending account properly kept made me understand the power of accountability in spending. The chart is beautiful.

[bitmover]

Hey JayJuanGee

I have been doing some updates in the website and had an idea. (Tell me if you ser bugs  i changed a lot of stuff around)

About the simulation of the remaining stash chart.
I think the chart could show the Y axis  from 0 btc to the initial btc stash. Now it shows from initial btc to "remaining" btc stash (usually far from zero.

It think it would be a more illustrative of how much btc is still left

What do you think?

[JayJuanGee]

Hey JayJuanGee
I have been doing some updates in the website and had an idea. (Tell me if you ser bugs  i changed a lot of stuff around)

About the simulation of the remaining stash chart.
I think the chart could show the Y axis  from 0 btc to the initial btc stash. Now it shows from initial btc to "remaining" btc stash (usually far from zero.

It think it would be a more illustrative of how much btc is still left
What do you think?

Of course, I use the sustainable withdrawal tool frequently (perhaps on a daily basis?), yet I don't use the historical simulator portion of the tool (as much).. even though I recall it to be working way better than I had expected it to work... Accordingly, I cannot recall the prior version going to zero in the visual representation.

I just went back through the tool to play around with the simulator, and of course there can be some disjuncture between the date of the information on the top (sustainable withdrawal) portion, and then using the starting date on the simulator to hypothetically consider how many BTC a guy might have had on a past date as compared with a present date... so frequently there are needs to consider quantity of coins on certain dates to be able to allow the simulator to give accurate answers, and the numbers can frequently end up being so amazing that we might have to do a double-take to figure out if we are making the proper estimates and using the tool correctly.

So, for example, in January 2021, my projection of a guy being able to sustainably withdraw $80k per year, suggests that a guy would have had needed have at least 102.5 BTC to be able to sustainably withdrawal at $80k per year (and that would be withdrawing at 10%... and that sounds like such a ridiculously high quantity of BTC.

And, this is what it looks like from January 2021 and anticipating withdrawing $6,666 per month.



Yet if we look at that same thing in the simulator, we would see that over the past 5-ish years, we would have had withdrawn right around 26.23 BTC ($1,3 million), and so right now we would still have right around 76.26 BTC.. so at a 10% withdrawal rate based on the 200-WMA value, our wealth still ends up going up around 5x in terms of our withdrawal potential.

At the same time, even if we had maximized the tool to withdrawing at 30% (in term of measuring from the dollar value), we still would have had retained 42..13 BTC after our withdrawal of 60.37 BTC ($2.8 million) over  the past 5-ish year.



Of course, the tool allows us to look at withdrawing strictly from the BTC quantity, which would have caused way more BTC to have had been withdrawn, yet even at a 30% withdrawal rate, we still would end up retaining 23.75 BTC right now after having had withdrawn 78.75 BTC (nearly $4 million) over the past 5-ish years.



At the same time, I am suggesting that right now, we ONLY need 15.1 BTC in order to retain an $80k per year income at a sustainable rate that even includes giving a 7% raise each year based on the dollar rate.  



It may well be the case that 5-ish years from now, BTC ended up growing in dollar value way faster than the withdrawal rate, even though I feel that I am proclaiming a fairly aggressive withdrawal rate to be sustainable (meaning that the dollar value is growing faster than the withdrawal rate as long as there is enough BTC in the stash).

I am not even asserting that there is anything wrong with the tool, even though I am sticking to my preference of wanting to use the 200-WMA as the measure of value and the measure of an appropriate withdrawal rate, even though it seems to end up being way more conservative than using the spot price that ends up using the BTC quantity as the withdrawal measuring amount.

At the same time, I wouldn't mind being able to show a 7% increase each year in the dollar amount that is withdrawn in the simulator (by using some kind of an additional setting that allows for annual increase in the withdrawal amount - which makes more sense, to me, when it is measured from dollars rather than from BTC), even though that might be complicated to add such a feature to the simulator portion of the tool.

[bitmover]

At the same time, I wouldn't mind being able to show a 7% increase each year in the dollar amount that is withdrawn in the simulator (by using some kind of an additional setting that allows for annual increase in the withdrawal amount - which makes more sense, to me, when it is measured from dollars rather than from BTC), even though that might be complicated to add such a feature to the simulator portion of the tool.

It is doable.

This 7% annual increase would be to compensate inflation? I think that is too aggressive, I think 3-4% would be more factual.

But I could add an input button called "Inflation per year" or something like that, and it would increase the anual inflation rate (which the user inputted) each month in the withdrawal ( divided by 12 ofc)

For example, if a user add 7% inflation it would add 0.565% each month to the withdrawals.

Did I get it correclty?

[JayJuanGee]

At the same time, I wouldn't mind being able to show a 7% increase each year in the dollar amount that is withdrawn in the simulator (by using some kind of an additional setting that allows for annual increase in the withdrawal amount - which makes more sense, to me, when it is measured from dollars rather than from BTC), even though that might be complicated to add such a feature to the simulator portion of the tool.

It is doable.
This 7% annual increase would be to compensate inflation? I think that is too aggressive, I think 3-4% would be more factual.

I was thinking about it as as a user-settable parameter that would be able to be placed in the simulator - so maybe it could range anywhere between 0% and 10% and it would just end up reflecting that users might feel that they need to give themselves an annual cost of living increase - and surely historically it might have had been closer to 3% (perhaps), yet since 2020, it may well be the case that even 7% might be conservative - yet of course, for sure, we likely realize that increases in the costs of goods/services is not spread out equally accross all products/services.. which would be further justification for the user to put in his own estimation of numbers.  It also could reflect that individuals would prefer to get a raise each year that is guaranteed (since they set it for themselves) that they would not have had been likely to have been getting through their historical work.

I am nearly 100% positive that historically sustainable withdrawal increases in the withdrawal amounts would have had been supportable with increases in the cost of living, even north of 10% - and of course, we cannot know for sure about the future, even though part of the reason that I like to pay attention to when BTC prices are at least 25% above the 200-WMA, is that it seems likely to me that if BTC is not going to continue to stay at least 25% above the 200-WMA, then we would likely be witnessing a sign that we might need to be careful in terms of giving ourself an annual raise in our withdrawal amount (presuming that we are withdrawing monthly-ish, we could potentially make our adjustment financially and/or psychologically in advance).

But I could add an input button called "Inflation per year" or something like that, and it would increase the anual inflation rate (which the user inputted) each month in the withdrawal ( divided by 12 ofc)

I think that the term "inflation" is ambiguous (it has various meanings), and so I would prefer it to be called something like "annual cost of living increase" - which may well be more of a layman's description that would be more understandable.

For example, if a user add 7% inflation it would add 0.565% each month to the withdrawals.

Did I get it correclty?

I was thinking about adding the adjustment annually, but perhaps from a programing perspective, it makes more sense that it would be added whenever the proposed (simulated) withdrawals are made, and in the case of the simulator, we had already presumed withdrawals to be happening twice a month on the  8th and the 22nd.. so I calculate for t7% that would be 7% ÷ 24 = 0.29167% -  Of course the tool would figure out the amount based on whatever percentage had been placed in the user input field that would ONLY be in the simulator area.. perhaps based on 0.25% increments?...


Edit:  I just noticed that in the tool, the 200-WMA is stuck at right around $57k for any user inputted date that is in 2026, and right now the 200-WMA should be showing in the supra $59k arena.

[bitmover]

Edit:  I just noticed that in the tool, the 200-WMA is stuck at right around $57k for any user inputted date that is in 2026, and right now the 200-WMA should be showing in the supra $59k arena.

Thanks for noticing. I uploaded a development file to the server by mistake. It was an incomplete file with just a few days of data. Now it is fixed again.

I was thinking about adding the adjustment annually, but perhaps from a programing perspective, it makes more sense that it would be added whenever the proposed (simulated) withdrawals are made, and in the case of the simulator, we had already presumed withdrawals to be happening twice a month on the  8th and the 22nd.. so I calculate for t7% that would be 7% ÷ 24 = 0.29167% -  Of course the tool would figure out the amount based on whatever percentage had been placed in the user input field that would ONLY be in the simulator area.. perhaps based on 0.25% increments?...

nice! I will work on that in a few days!