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Even though everything that you are saying comes off as mostly correct, it also comes off as a bit theoretical if you cannot elaborate on what you mean a bit better, perhaps with the use of some examples or something like that.
Okay let's try looking at a hypothetical scenario of a successful entrepreneur who has over the years, built quite a sizable amount of Bitcoin, and as the years goes by, her Holdings have significantly grown and have reached a state of overaccumulation, and now worth around $10 million.
If you are referring to current spot prices then we are talking about 92.6 bitcoin.
Now the entrepreneur's focus shifts from building more wealth and stacking up more funds to managing his existing portfolio and optimizing his financial position.
Ok... so you are proclaiming that this hypothetical guy has come to a conclusion that he largely has enough bitcoin, so he does not necessarily need to continue to spend time accumulating bitcoin to the extent that you might be suggesting that up until now he had been accumulating bitcoin.
I would find it helpful to know how he got to such 92.6-ish BTC status and other parts about his personal factors - besides merely that he is changing his mindset in regards to how he thinks about his bitcoin, since I would have had considered that a guy does not just come to 92.6 BTC, and his mindset likely had already been changing little by little through the years.. and golly-gee whiz, there are quite a few different paths that the guy could have had taken to get to such 92.6 BTC, which many times would be relevant.. even though surely the mere fact that he has 92.6 BTC does remain relevant in and of itself too, so I will grant you the relevancy of that part.
He's determined to maintain his desired lifestyle, render financial support to his family and still ensure his financial stability.
So to achieve this goal, he decides to implement a time based strategic withdrawal approach by selling only 2% of his Bitcoin holdings quarterly, and by doing this, it allows the entrepreneur to generate a steady income stream while also simultaneously minimizing tax implications.
I don't have any problem with the idea of selling 2% of the BTC quarterly or even 8% annually, and previously, I had considered BTC management in those kinds of terms, yet in recent times, I have considered using the 200-WMA to value the coins and then to withdraw based on that in order to attempt to get to a more solid (and stable) results, even though surely a guy could also upwardly adjust the dollar amount each year in order to account for the potential debasement of the dollar or the lessening of the purchasing power of the dollar each year, and in recent times, I had just been using a 7% per year presumed debasement for round about convenience in regards to what might be a fair estimate. My own webpages and withdrawal tool has not really accounted for some of my current thinking on the matter, even though there is enough information in the generated data that these kinds of steady and reasonable dollar-based withdrawal formulas can be figured out.
Of course, we don't exactly need any tool to figure out how much 2% per quarter withdrawal rate would be since we just look at the BTC quantity and we can project the balance of BTC that will be remaining each quarter after we sell 2% of our stash each quarter, so the first quarter we would sell right around 1.85 BTC, which would be right around $200k.. and which would be the withdrawal of $800k per year.
Based on the use of the
200-WMA, currently I am showing a yearly withdrawal rate of right around a $458k rate for a current stash of 92.6 BTC.
I consider that either rate would be sustainable, even though you are calculating a bitcoin amount to withdraw which is likely going to contribute to a lot of variance in the dollar value, and I am considering starting with a dollar value and presuming that each year I will be able to increase it by at least 7%, if I want... and any excess appreciation of the value will continue to compound.. unless I adjust my withdrawal rate from time to time to account for my new valuations...and personally, I don't consider the possibility of annual-ish re-evaluations to be particularly problematic or burdensome, and sure even your goal of withdrawing 2% of the BTC per quarter would not be burdensome to adjust from time to time, whether annually or otherwise.
And even in times when the market starts experiencing a sudden decline and the price of Bitcoin drops by 30%, as many investors begins to panic and selling off their Bitcoins, the entrepreneur keeps his cool and sticks to selling only the predetermined amount of Bitcoin according to his plan earlier and thereby, ignoring the short term market fluctuations,
Sure. that is possible that guy currently with 92.6 bitcoin and a 2% per quarter withdrawal rate is going to be able to deal with the fluctuations and to just withdraw his 2% no matter the bitcoin price, so even if the BTC price goes down 80% as it has historically done, your guy would still be able to withdraw his 2% even though it ONLY retains 20%-ish of today's value.. not that either of us consider an 80% draw down from today's price to be very realistic, and perhaps slightly more than a 50% draw down from our current prices, might be more within an area of potential drawdown that coudl end up happening, even though we may also have more up before down, even though we likely do have to prepare financially and mentally for either direction.
I think that my guy who would be withdrawing based on the 200-WMA would likely go through less variation, even though i do start to reduce the withdrawal rate once the BTC price goes below 25% higher than the 200-WMA.. so currently, if the BTC price were to go below $62k-ish, then my system would start to recommend reductions in the monthly withdrawal amount... For my system, a $458k annual withdrawal amount is $38k per month when it is just following the standard withdrawals and not withdrawing extras on booms or reducing on BTC spot price corrections that go below 25% above the 200-WMA.... and right now the BTC price is right around 120% higher than the 200-WMA.
but rather interested in achieving his long-term financial goals.
What are his long-term financial goals? just to continue to live off of his bitcoin.. whether withdrawing a steady bitcoin rate or perhaps withdrawing based on a dollar rate and continuing allowing it to grow and compound upon itself as long as the withdrawal rate is not too high.
Don't get me wrong, since I think that even withdrawing on bitcoin percentage is o.k... yet I become a bit bothered by the likely extreme changes if the income is purely based on a straight bitcoin withdrawal rate since I think that it is going to fluctuate quite a bit in terms of dollar value that is being withdrawn.
And by prioritizing his financial stability, by managing tax implications and maintaining his planned allocation, he's able to optimize his financial position, while simultaneously minimizing and mitigating unnecessary risks. His strategic bitcoin withdrawal strategy enables him to achieve his specific objectives and also ensuring that he's more prepared for the future.
I don't have any problems with any of those goals, even though I consider that it would be more stable to withdraw at some rate that is lower than a strict bitcoin amount, even though I do have some funds in two of my bitcoin accounts that have been being withdrawn at a steady rate since about early 2023, even though their value went up more than 4x since then.. but I have continued to allow them to be withdrawn at the same BTC rate.. and perhaps part of the reason that I had been allowing such is based on my having had used a 4% annualized withdrawal rate, even though I know that a 10% annualized withdraw rate would likely also be sustainable.. so even though I had not been reducing the allowance based on dollars, I had been ONLY allowing less than half of the amount that I consider to be sustainable. which also just means that the remaining (not withdrawn) value continues to compound upon itself for the possibility of higher future withdrawals if needed or even not needing to reduce the withdrawal rate, even if the BTC price were to go down 50% from here or maybe even 80% at some future time.