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.
Some funds are more liquid than others too.
Some funds offer various kinds of benefits of tax incentives or even cost of moving them.
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. 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 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 below $500 per coin depending on how many BTC I bought, and presuming that I might be able to get into bitcoin around $380-ish per BTC. I was considering transferring those funds into some kind of a self-directed retirement fund to avoid negative tax consequences. 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 enough bitcoin. and I did not necessarily want to have more of my then networth in bitcoin. since it was then 10% in bitcoin, but maybe if I had gone through with the deal, it might have put 20% to 30% of my networth in bitcoin, depending on how I carried it out.
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 to 75% in 2017 and then came back down to 40% in 2018, and then it went up to like 80% in 2021 and back down to 60% in 2022 and then perhaps currently in the ballpark of 90% in bitcoin, even though I did not make any special allocation into bitcoin, and 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 than necessary to still greatly profit from continuing to have bitcoin and not really selling large amounts of it...
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 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, and sure, many folks have proclaimed that my dollar performance may well be greater by holding the MSTR product rather than directly holding BTC.