Quote from: Bluedrem on Today at 04:45:50 PM

Quote from: JayJuanGee on Today at 07:08:14 AM

I have given some thought to the idea of putting some portion of my bitcoin in some kind of a product that earns yield.. .. so then I would lose control of the bitcoin, yet hopefully hold the equivalent of that bitcoin and then earn yield in dollars.. but right now, I am not at that stage in my own bitcoin journey and/or the way that I am currently managing my bitcoin holdings.. I will admit that there could be some motivation to figure out ways to lessen tax implications, so at some point in the future, I might end up putting some portion of my bitcoin into some product that I might be able to use as a way of getting dollars and not having to pay capital gains on my bitcoin in terms of the alternative of regularly selling bitcoin and then being stuck with capital gains taxes on those sales, which i have been doing for quite a few years... maybe 10-ish? There might have been some years where I did not have any bitcoin sales, so no capital gainz, but I cannot recall off of the top of my head.

JJG As you said, invest some money in such a sector so that you don't have to sell the Bitcoins at the right moment.
Yes, I will tell you a story about my investment.
When I started investing in Bitcoin, I had a very small amount of money in my emergency fund.
A few days after investing in Bitcoin, I received a large amount of money from my father. One night, I was thinking about what to do with that money. At one point, I thought that I should invest the entire amount in Bitcoin, and then I thought that I should also keep some money in my emergency fund. While thinking like this, I was looking for the best way to use the money. Later, I thought that if I invest this money somewhere, I will invest in Bitcoin with the profit I get every month.
That's what I thought. I invested the money in a sector from which I get a good amount every month, and as soon as I get the economic profit, I invest the entire amount in Bitcoin. Now I am very confident that even if the entire amount of money I earn from my job is spent on basic needs, I will be able to buy Bitcoin continuously.
Although I have the highest confidence, I am not disappointed if I did not invest the entire amount in Bitcoin at that time because I have been able to invest in Bitcoin so far with the profit earned from that money. And now I am very confident that if God forbid, an emergency situation arises when I cannot meet it with the money in my emergency fund, then I will be able to use the money invested in that place as a backup fund.

Of course differing kinds of funds offer differing costs and benefits, and we might get ourselves in a pickle if we don't keep enough back up funds so that if some kind of an unexpected need for cash comes we have to have some place from which to quickly draw such funds, so it would be dangerous to end up having to tap into our bitcoin investment rather than having enough cash available.

In terms of being able to draw from somewhere, some funds are more liquid than others too.

Some funds offer various kinds of benefits of tax incentives or even cost of moving them, so there can be disincentives to move them. Relatively speaking BTC tends to be quite liquid.. so depending on how fast any need for cash were to occur, we might ONLY have bitcoin as the fastest means to get the value available to us (or within our bank account) within a few days.

One thing is emergencies, and then another thing is trying to decide where to hold funds, especially if we might consider that bitcoin is a great place to hold value, yet at the same time, we might also consider the extent to which we might be becoming overly exposed to bitcoin as compared with other places that we might be holding our value.

I recall in late 2014, after I had already been accumulating bitcoin for about a year, my investment into bitcoin was right around 40% in the negative with BTC prices around $380 and my average cost per BTC slightly higher than $600 per BTC. At that point I had put right around 10% of my quasi-liquid investment portfolio into bitcoin (counting all my assets and trying to figure out their value based on how liquid they were.. so for example, with real estate property that I owned, I only counted about 30% of the value and considered them pretty non-liquid.. similar with my stake in a business that I then owned).

At that time, in late 2014, I was going through calculations about how much bitcoin I had and various assets that I had and the extent to which I might be able to put some of the value from the other assets into bitcoin. I was considering if I withdrew either the size of my bitcoin investment or even close to double the size of my bitcoin investment from my 401k, then I could double or even close to triple the size of my then bitcoin holdings, and maybe still hold some of the remaining value in my 401k. So I would ONLY be withdrawing 30% to 50% of my 401k holdings. It would also likely bring my cost per BTC down to from a little bit over $600 per BTC to below $500 per coin depending on how many BTC I were to be able to buy, and presuming that I might be able to get the additional bitcoin for around $380-ish per BTC.

I was considering transferring the 401k funds into some kind of a self-directed retirement fund to avoid negative tax consequences and then to buy BTC with it. In the end, i decided not to do it, since I considered that it was probably better to keep some decent amount of my value in traditional finances to serve as a kind of hedge to my bitcoin investment. At that point, I was also starting to consider that I had already accumulated enough bitcoin, even though they were right around $40% in the negative, and I did not necessarily want to have more of my then net worth in bitcoin. since I considered that my quasi-liquid net worth was then 10% in bitcoin, but maybe if I had gone through with the deal, it might have put close to 30% of my quasi-liquid net worth in bitcoin, depending on how I carried out such a reallocation. I did not end up cashing out any of my 401k to put into bitcoin.

In the end, after those 2014 considerations, it ended up becoming that merely through bitcoin's price appreciation (rather than my moving funds around), the proportion of my wealth in bitcoin went up from 10% to 13.5% by my merely adding manually in 2015, and then from 13.5% to 75% in 2017 due to the BTC's price movements, and then my proportion in bitcoin came back down to 40% in 2018 due to BTC price drops, and then it went up to like 80% in 2021 due to BTC price moves upward, and back down to 60% in 2022 and then perhaps currently in the ballpark of 90% of my quasi-liquid wealth in bitcoin, even though I did not make any special allocation or reallocations into bitcoin, and the changes were all largely due to changes in the BTC price. I even made some mistakes of losing some of my bitcoin along the way too... so just imagining if I had moved up to half of the value of my 401k into bitcoin in 2014, that might have had been overkill and/or way more wealth put into bitcoin than necessary to still greatly profit from continuing to have bitcoin and not really selling large amounts of it... Maybe I would have lost that portion too? Not easy to say with "what ifs?"

If we are looking at products that potentially produce yield and potentially have abilities to transfer into them without tax consequences, then we are going to consider these kinds of matters when choosing which products we hold, so I personally had considered that there could be some products that I might be able to hold without selling BTC, yet many of the MSTR products or copy cat of MSTR products would require my selling BTC to hold the MSTR product, yet the MSTR product is pegged to BTC, allows MSTR to buy more BTC with my money, and then perhaps I would get the upside price performance in dollars or even metrics that are tied to BTC prices, but still if I cash out of the MSTR product, I have to cash out in dollars and then buy BTC if I want to actually hold the BTC rather than cash, and sure, many folks have proclaimed that my dollar performance may well be greater by holding the MSTR product rather than directly holding BTC... yet there are trade offs for getting that kind of supposed better performance (value).