Yesterday, I had a $100 private purchase with a relative.
I know that some ACH bank transfers are free; however, after I discovered that my bank was going to charge me $3 to ACH transfer our $100 amount, we agreed to follow through with your transaction with bitcoin.
Let me say that I had done bitcoin transactions with this particular relative in the past (I had sent him $10 when BTC prices were $385, and about a year and a half later, I had sent him $30 when the price was $420), so I knew that the relative was somewhat familiar with bitcoin, but I also knew that the relative was very doubting about bitcoin. Therefore, I was a bit surprised that he was willing to do our transaction in bitcoin. Before he agreed to receive the $100 in bitcoin, I made a bit of a sniping comment about his seeming lack of bitcoin enthusiasm, and I said something about him not even being able to figure out what was a bitcoin address.... hahahahhahahaha..
Anyhow, he agreed, and I sent the transaction, and I even included a bit more (sent him $105 when BTC prices were about $8,372) in order to be assured that everything was covered and he would be able to cash out with at least $100 at any time that he wanted. Within less than 30 minutes of the transaction, he made his own sniping comment back at me and said that the BTC transaction was showing as pending as $104.81 - suggesting that it already lost value.
So I sent him back a text saying that he could cash out his bitcoin at any time and even though there are not guarantees, there remains a decent chance that at various points within the next 3 years that his received bitcoin will be worth at least 50% more than it's current value, and that there are not too many other assets that I would be comfortable making a similar kind of an assertion. As I type this post, BTC prices are about $7,500, and the value on my wallet is showing the value of the $105 at about $106.91.
Accordingly, I conclude that my yesterday's Btc prediction to my relative was fairly conservative.
Furthermore, with almost anyone getting into bitcoin, I feel relatively comfortable recommending at any Btc price point that they put at least 1% of their quasi-liquid investment value into bitcoin. Of course, any newbie bitcoin investor could increase that investment amount up to 10% and even though such an increased allocation would be more risky, it would not compose a very large amount of their total quasi-liquid investment capital.
Maybe some of you guys in bitcoin have been investing into bitcoin for several years, and maybe you did not put 100% into bitcoin, but you put a decent percentage, something like 5% of your initial investment into bitcoin? But probably now the value of your bitcoin assets is in the 40% to 70% or more arena even though you may have also pulled out some or all of your initial investment?
Is 40% to 70% allocation an Over-allocation into BTC?
I believe that my current allocation into BTC is about 75%, yet that allocation had grown to over 90% when the btc price had gone up to $19,666, even though my initial starting investment amount was in the 10% to 15% arena.
Am I Over-allocated into BTC?
My particular imbalance of value towards Btc came from Btc price appreciation over the past 2.5 years rather than from my putting that value into Btc but still doesn't seem to motivate me to want to pull out a lot of the value from Btc even when having such a volatile asset composing such a large percentage of my total does cause ongoing erratic value swings. Go figure.
I have very little faith in fiat currencies and definitely do not keep more than 5-10% in them at any one time. What country is stable enough to hold their fiat? Even investments denominated in fiat are still subject to the inflationary nature of the underlying fiat.
If you look at the US, they are currently $20 trillion in debt with over $100 trillion in unfunded liabilities (meaning, future promised money will not be able to be paid by future taxes). The payment per year in just the interest on the debt is around $300 billion. The defense budget is one of the highest expenditures at $600 billion. Eventually the interest on the debt will be higher than defense spending. The only way to keep paying it will be to borrow more which makes the interest payment higher going into a debt spiral.
The only way out of it is to either raise taxes (which will only go so far) or cut spending (never gonna happen) or the easiest thing to do is print enough money so that $20 trillion is not that much money (same as a loaf of bread). My thought is that they will choose the latter. What happens to your $100k in google stocks when $100k is worth a tank of gas?
When I was referring to quasi-liquid assets, I was thinking about any kind of asset that you could invest into, and performing a kind of ball park estimation about what the value of those assets would be, and then considering investing (or allocating) a portion of the value of those assets into bitcoin.
Since this is the dollar to bitcoin thread, we frequently talk in terms of dollars, and surely some of our assets will be directly in dollars, but some of our assets will be directly related to the dollar, such as owning stocks or bonds or some combination of index funds.
When I got into bitcoin, I was not a newbie to investing because I had bought property and I had also dollar cost average invested into various kinds of stocks and bonds like products. There were times that I had also considered investing in PMs such as gold and silver because I had considered that so may of my investments were so tied into the value of the dollar that gold might provide a decent amount of non-correlation, yet some of the cumbersome nature of gold and silver and even attempting to verify that it is legitimate or figuring out how to spend it in an emergency, made me consider hoarding or even accumulation of pms to be very impractical.
Even in late 2013, when I first started looking into Bitcoin, there seemed to be a certain gold-like and non-correlated value in bitcoin that brought a certain level of insurance (and hedging) comfort from putting a portion of your total assets into it (just so your investments are not so much tied to one thing - which I had considered to be the dollar).
One other aspect of liquid asset might be assessing something that is not very liquid, such as a business that is worth $200k or something like that, but maybe the non-liquid aspect of it would cause a quasi-liquid assessment of $20k or some fraction of the value (merely because such business is not very liquid) - and similar calculations of liquidity may be made of other assets in order to determine how much to invest into bitcoin and what might be a 1% investment or a 10% investment... approximately.