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Yes, if we assume that the guy has $5k and is interested in investing in Bitcoin he may have some extra cash as an emergency fund that is net investment fund, but he should not try to restrain himself from aggressively buying Bitcoin. I mean, if the guy has a net investment fund and also has some extra funds from which he can spend for the next three months or six months should his entire fund be available for single Bitcoin buy? The answer is that he should still divide it into a few slots since he is a newbie investor and he is committed to holding for the long term. Or if he is more confident about Bitcoin he can reduce the investment slot further. But I think he should continue to buy with market monitoring so that if for some reason the price drops, he can buy more.
The idea that you have provided that if that investor has cash funds committed to investing he might indulge in luxury if he is likely to encounter that situation he would have to spend his entire net funds to buying Bitcoin regardless of the price. In my opinion Bitcoin is not a luxury, it is a long-term effort to build the future. At the same time the guy should continuously accumulate Bitcoin from his weekly discretionary income.You seem to misunderstand my use of the term luxury when I referred to having a lump sum available to a person, such as having $5k available, is a luxury.
The meaning of luxury is that the guy has options regarding how to treat that $5k, which means that he has options regarding how to treat that $5k.
A lot of people do not have the option to have $5k available, and so therefore it is a luxury to have options available that most people do not have.
However, one can decide to take some portions of their profits only if they invested for very long like about 4-10 years, it would be very foolish for one to sell every Bitcoin in their wallet just because they've invested for a longer period they can choose to sell some portions and channel into other business areas and generate more income to keep adding Bitcoin to their portfolio but taking profits should strictly be when they've invested for a very longer period and not below the full circle.
Everybody is at liberty to do whatever they wish at the end of their holding period. For example: A person who invested into Bitcoin throughout his working years and held for 30 years is already a long-term holder and he can decide not to deal with the volatility of Bitcoin at his old age and sell of his investment to take care of his much older years.
Again people hold for various reasons, a person can be investing into Bitcoin for the purpose of starting a very profitable business venture at a much later time, and after like 10 - 20 years of investing and reaching his accumulation target, isn't it wise he achieved his dream? Perhaps he may wish to his sell off and achieve his dream and resume investing from the proceeds of his business.
Some other guy might wish to keep holding and only shave off profits in bits to take care of himself at the expiration of his holding period.
All these scenarios are valid, everyone is at liberty to do whatever they want with their Bitcoin at the end of their holding period, although I'm likely going to be the third guy, but It's entirely my decision.
Surely investing into bitcoin gives options, yet from your three examples, it seems quite short-sighted for the guys of either of your 1st or 2nd example to completely cash out of BTC for either inferior investments or consumption. But, yeah people can do whatever they like, even dumb stuff. I do understand though how a person who might have health or age considerations, might end up cashing out of BTC in a more expedited way to cash out of the likely appreciating portion of bitcoin and out of the principle too.
I think all the small investors who have the habit of selling Bitcoin actually don't understand anything about investing. But I don't agree that big investors have a habit of selling Bitcoin, in fact they are called big investors because they buy Bitcoin regularly and own a lot of Bitcoin. That is, they are very experienced and patient, so they have been able to increase their Bitcoin holding, and even have a lot of patience to maintain their investment. So it would be wrong to say that big investors have the habit of selling Bitcoin.
Not only is prudent income necessary for small investors, it is much more important and necessary for all investors. In fact, in many cases, many use the words prudence and disposable income, so they should know properly.
Everybody needs to fix their profits eventually.
If you are in an investment, you might not need to preoccupy yourself with profits, especially since after a decent amount of time, you merely presume your investment is in profits, so then they main question merely becomes what your sustainable withdrawal rate might be. In traditional investments sustainable withdrawal rate can be considered to be 4% annually, so then you would want your investment to grow at least as much (on average) as your withdrawal rate. I personally consider that in bitcoin if you measure the value of your bitcoin investment from the 200 WMA (an estimation of the bottom prices), then you likely could employ a 10% per year withdrawal rate based on valuation.
So for example, right now, if a person wanted to have a
$80k per year income from his bitcoin investment, he would need at least 18.1 BTC to be able to withdraw 10% from the 200-WMA valuation which is at $800k.
It seems to me that an investor who is attempting to engage in sustainable withdrawal most likely just needs to measure how much BTC that he has rather than how much he is in profits, even though surely it also seems that none of us should be wanting to sell our BTC if they are not in profits..so maybe there is merely a presumption of profitability, yet how much profitability exists would surely partially depend upon how long the guy had been investing and what kinds of BTC accumulation strategies he had been employing... hopefully strategies that mostly relate to buying such as lump sum, DCA and buying on dip. Of course, I personally don't recommend trading as a method to accumulate BTC, yet there may be guys who had included some trading in their past accumulation strategies that might have had ended up affecting how long it had taken them to reach their BTC accumulation targets.
The thing is most smaller investors are not standing on the same stable ground as the bigger ones - they still need to think about their potential risks and much more, whereas guys in suits and a bit lower don't need to think about it.
This category of big versus small makes little sense, except if maybe we are talking about people who might have more discretionary income than others or perhaps there are some folks who have more assets than others, so sometimes they can convert one asset into another asset and then be able to buy bitcoin in that way. So sure, if a guy has more resources, whether it is income or assets then he likely has more options, even though again it hardly makes any sense to merely talk about someone in terms of the income/asset side of the ledger without considering expenses/liabilities... so then we get back to the more important calculation to be what is the difference between income and expenses, rather than getting preoccupied with assessing the size of the income ONLY.
I Friend of my was telling me today the amount of bitcoin that he has store in bybit so far, that's why I intended to share this talk with everyone on this thread, As we talk about accumulating bitcoin and hold for a long period of time, let also talk about securing our bitcoin investment, because we can't only centralize our focus on accumulating bitcoin continuously, without also talking about how to protect our bitcoin investment for the long period of time.
Securing your bitcoin is crucial to protecting your investment, I came to understand that many investors expecially newbie still have their bitcoin investment store in a centralized exchange like bybit and binance and other exchanges, while there are storage options that one can use to secure and take control of their bitcoin investment, options like (hardware wallets , paper wallets and software wallets) why not get one of this wallet and secure your bitcoin investment rather than leave them in a centralized exchange were you don't have full control over your bitcoin investment.
Of course, every investor should figure out ways to hold his own private keys, so he has to learn about that and learn how to protect his private keys. The threshold for someone to move coins off of exchanges might be different, and some guys might not be willing to hold any more than $500 on an exchange, and others might be willing to hold $5k, yet surely there could also be considerations of percentages of the BTC stash, so maybe a more experienced bitcoin might try to hold 90% or more of his value in various kinds of private ways, and some of that might be more easily accessible such as a hot wallet, and other might be medium levels of access or others might be cold storage and harder to access.
There is a lot of power that comes from holding your own keys, yet there can also be some learning about how to make sure that they keys are secure too, but not so secure that you overly complicate your set up in such a way that causes you to lose your bitcoin. There are some people who are afraid to set up their own private wallet, even though it is not very difficult on the surface, even though there could be questions about choosing the right kind of wallet and making sure not to make mistakes that cause you to lose your coins.