In the last several years, I have been gravitating towards higher than 4% withdrawal rates so long as the valuation of the holdings are based on the 200-WMA and the authorized withdrawal amounts are pegged to dollar valuations... For probably more than 4 years, I was already presuming that guys should be able to withdraw greater than 4%, even gravitating up to 6-10%, and when Bitmover put the back tester in the tool (about a year and a half ago -
here is the thread on the topic of creating the tool), I was able to see that even maximizing the rates (which it ONLY goes up to 30%) would still allow for long term growth in the value of the holdings in terms of dollars - yet I also started to think that it was too risky to peg the amounts to BTC amounts and also to go so high with the withdrawal rate when it likely was not needed and would end up overly depleting the BTC holdings, since many of us likely recognize and appreciate that bitcoin is likely the best of places to hold value, so why would any of us want to be motivated to overlydeplete our bitcoin holdings (and draw down principle of our bitcoin holdings) unless we were to have some major health event or perhaps based on our age (and no desires to pass wealth down to heirs).
Of course, there likely remains to be value to spend from other income sources prior to spending from bitcoin, or alternatively to withdraw at fairly conservative rates in order to make sure not to overly deplete the bitcoin holdings, even though surely it seems to be the case that bitcoin tends to grow much faster and better than other assets and bitcoin can even tolerate higher withdraw rates and still to be sustainable, so surely, I don't mind some level of creative aggressive withdrawal in terms of still maintaining some frameworks to try to make sure that withdrawals are not being done in ways that overly deplete the bitcoin holdings, and it still seems to me that we ongoingly witness examples of guys having regrets because they end up selling way too much bitcoin too soon.
Ultimately, even if I am attempting to share some kinds of frameworks in which guys can consider their bitcoin withdrawals once they reach overaccumulation status, there still seem to be guys prematurely concluding that they reached overaccumulation status., yet maybe even in those cases if guys might start to practice some kind of sustainable BTC withdrawal, then he can figure out some kinds of boundaries to reassess from time to time, and surely I am way more convinced that valuating based on the 200-WMA (bottom price valuations - and conservative valuations) will likely lead to more stable levels of withdrawal, even though at the same time, it seems that my suggestion that a 10% withdrawal rate may well seem high to some guys and also may well end up being a high rate if guys are withdrawing 10% of their BTC rather than 10% of their 200-WMA dollar valuation and perhaps even leaving some kind of an extra cushion in there so that the withdrawals do not end up being excessive..
This is a well though-out point of view, very relatable too. I am very much interested in the idea of bench-marking against 200-WMA instead of relying on the illusions of spot price unrealistic expectations. Basically, I sometimes wonder how many of us are ready psychologically to discipline ourselves on how much bitcoin we withdraw, even if we set clear limits like 6% to 10% a year. I mean, sure, it seems so easy to say, I can only withdraw 10% of my 200-WMA valuation every year, but once the kicks in and the price goes up 2x or more above the MA line, most of us wont overcome the temptation, especially for investors who dont really know why they set those limits in the first place.
You might be underestimating the discipline that guys can create for themselves - especially if they might have already come to bitcoin with a decently long investment timeline, and they are finding bitcoin to outperform their expectations.. especially if they are able to valuate their bitcoin using conservative standards.. which also ends up helping them to see that they don't necessarily get to an overaccumulation status so easily.. yet once they get there, they likely are able to live off their bitcoin stash in sustainable ways and even to see that their bitcoin investment is tending to outgrow their withdrawal rate by so much that they are likely able to increase their withdrawal rate with the passage of time, even beyond a 7% per year growth rate (or expected debasement of the dollar rate).
Also, the issue of over-accumlation (that sis people thinking they have accumulated enough bitcoin too soon) just like you said earlier on, it happens frequently. They have barely gone through one cycle, maybe two or three as the case maybe, and then they suddenly shift from accumulating to draining. It leaves no other thought, than the conclusion that their goals are too shorts or they misunderstood just how long and profiting the journey can be.
Part of my motivation for creating this thread is to help to give guys some tools so that that they can figure out some reasonable sustainable withdrawal rate. Ultimately they are responsible for their own decisions and if they fuck up because they are withdrawing too much BTC too fast, then they may well be doing something wrong, like you suggested, and perhaps instead of starting out with a 6-10% withdrawal rate, as I consider to be reasonably achievable, they can start out with a more conservative rate, such as 4% and then see how that plays out for a year or two, and then perhaps consider if they can increase their withdrawal rate at a later date, in the event they might be able to reasonably conclude that their BTC stash is greatly outgrowing their withdrawal rate, even if they are measuring their valuation from the 200-WMA and using the dollar equivalent of their 200-WMA valuation.. so in the end, many of us already know that historically, the BTC spot price has tended quite a bit of its time at least 25% higher than the 200-WMA, yet if we are able to adjust are withdrawal rate down during periods in which the BTC price is less than 25% higher than the 200-WMA.. then we are also likely going to experience considerable growth in our BTC, especially further out in time, and surely the greater that our bitcoin grows in value, then the more likely that our withdrawal rate is going to be more than sufficient for our needs and our wants. The historical data seems to bear it out, and bitcoins investment thesis does not seem to be getting weaker, even though there are no guarantees in regards to its future performance, so we just need to figure out ways to do our best in terms of finding ways to reasonably figure out if we are still in our accumulation stages or if we truly have reached overaccumulation status so that it starts to make sense to start to employ price based and/or time based sustainable withdrawal practices.
And I agree, immediately an investor starts tapping into his stack (which is not advisable) without setting boundaries or realizing himself, everything might wipe out in a twinkle of an eye. From little fractions to nothing in their portfolio. Seen it too many times, trust me.
If anything, what interest me the most about your method is that it allows investors to accumulate, withdraw, at the right time, without getting too overwhelmed about the whole thing.
Surely there is a bit of a punchline that we truly should not be assessing ourselves as having had reached overaccumulation status when we have not, so if we end up screwing up those kinds of matters because we miscalculated, then that is on us... and surely there can be value in erroring on the side of more conservative practices.. even though I believe that when any of us get to overaccumulation status, there are a lot of optiions and quite a bit of flexibility to figure out ways to either wait for some time or to start withdrawing in ways that are not depleting our principle.