What should someone who has made millions from BTC do?

[Brendan Burgess]

It would be far more worthwhile encouraging folks to right size their exposure.

Hi tecate

I think that this is a very important point. In one of the other threads a poster has told us that he has millions in his BTC account.

Fair play to him.

What would you advise a 30 year old who owns BTC with a market value of €3m to do? Assuming they have no other assets.

Brendan

 

[tecate]

What would you advise a 30 year old who owns BTC with a market value of €3m to do? Assuming they have no other assets.

I wouldn't advise anyone to do anything - I know nothing! People have to do the homework and figure it out for themselves (and then take personal responsibility for whatever they decide to do). That said, I've always thought in terms of a few percent allocation being relatively harmless for people generally. Maybe that can be revised upwards as we go forward but for right now, a few percent of overall portfolio.

When it comes to newcomers, they tend to get interested at precisely the wrong time. Nobody ever asks Bitcoin folks about BTC in the middle of the depths of a bear market. Dollar cost average in over a longer duration and don't try and time it.

 

[Brendan Burgess]

I've always thought in terms of a few percent allocation being relatively harmless for people generally. Maybe that can be revised upwards as we go forward but for right now, a few percent of overall portfolio.

OK, a few percent of the overall portfolio.

So someone has a portfolio of €3m.

A few percent would be say 10% or €300k.

They should liquidate 90% of their portfolio and invest it in something else - maybe equities and property?

Brendan

 

[Brendan Burgess]

Clearly, I believe that they should liquidate 100% of it, but I would be delighted if a friend of mine with €3m in BTC sold off 90% of it and diversified.


Brendan

 

[tecate]

They should liquidate 90% of their portfolio and invest it in something else - maybe equities and property?

I think that's reasonable.

Clearly, I believe that they should liquidate 100% of it, but I would be delighted if a friend of mine with €3m in BTC sold off 90% of it and diversified.

I acknowledge your point of view on it but clearly telling folks not to do it isn't working and I'm pretty confident it won't work going forward. 10% or less of an allocation won't sink any ship in the grand long-term scheme of things and it allows folks to participate and reap the upside if Bitcoin continues to embed itself. I'm assuming we're talking about Bitcoin. If it's "crypto", probably best to cap it off at 3%. 10% is also something that those that don't have any bitcoin allocation within their portfolio should consider.

 

[Duke of Marmalade]

City of Troy is even money for the 2000 Guineas in two weeks' time - I do fancy it and I'm thinking of investing 10% of my humble nest egg on it. Do people think that that would be "relatively harmless"?

 

[tecate]

City of Troy is even money for the 2000 Guineas in two weeks' time - I do fancy it and I'm thinking of investing 10% of my humble nest egg on it. Do people think that that would be "relatively harmless"?

Taking tips from you, Duke? With your record over the past six years? That's the furthest thing from 'relatively harmless.' You could have been front and center as Brendan's featured 30 year old having made the 3 million had you listened.


(Okay, that's all accurate apart from the 30 year old bit 77?).

 

[cremeegg]

Victorian novels are one of my favourite forms of relaxation. Lots of them are very taken with the characters financial situation, The Forsyth Saga, The Warden, North and South.

They had the concept of 'realising your profits'. When the character wanted to finish his disreputable life in trade and making money to become respectable, he would liquidate his other assets and invest in property.

If a person is actively managing their Bitcoin investments and keeping on top of all the developments etc that's one thing (its all mumbo jumbo to me, but what do I know) and such a person should know when to sell Bitcoin as a trading decision (unless of course they just lucked into it).

If they no longer want to stay active in Bitcoin and want to de-risk, we no longer seem to have a default low-risk investment asset.

 

[Gordon Gekko]

The fella who bets his life savings at the roulette table and wins isn’t a genius, he’s an idiot.

I know someone who has very substantial wealth and stuck €500k into crypto-currencies and got out at around €8m. In my view, he’s a very clever person.

I know someone else who has the vast bulk of his wealth tied-up in cryptocurrencies. In my view, he’s an idiot.

The overarrching point is that most of these Bitcoin/crypto investors don’t understand risk or risk/reward.

 

[Duke of Marmalade]

(Okay, that's all accurate apart from the 30 year old bit 77?).

It is out of order for the plebs to ask their aristocratic superiors their age? But no, you are confusing me with The Donald.
But there is a serious point here. It is typical for supposedly respectable houses who are peddling crypto, most recently in ETFs, to spout hubristic nonsense about how a wee bit of crypto, maybe 3%, makes sense based on Modern Portfolio Theory. I posted an example from Fidelity (I think) which did its totally pompous mathematical smoke and mirrors to "prove" that if you assumed btc would grow at 10% p.a. then x% would be the correct theoretical holding.
A contributor on AAM suggested that this sort of bogus nonsense could lead to widespread but ignorant holdings of crypto simply posing as the correct scientific percentage of a diversified portfolio.

 

[Brendan Burgess]

Hi Duke

I don't think that anyone should have any holding in crypto.

But many people ignore my views and are 100% in crypto.

If I could persuade some of them to cash in 90% of their gains, I would be delighted.

I am glad that tecate agrees that people should not be 100% in crypto.

Brendan

 

[Brendan Burgess]

This thread is equally important to those that have zero Bitcoin included within their portfolios at the moment.

Feel free to start a separate thread on that.

This is very specific. Those who have made lots of money already on BTC.

Brendan

 

[Duke of Marmalade]

The Duchess is currently engrossed in an online discussion called FatFIRE. It is about folk who have so much money they don't know what to do with it. One guy claims to have made €13m on bitcoin; they are all telling him to cash in; I don't think he is listening - now that is faith.

 

[DazedInPontoon]

As someone who has a friend, ahem, who has had over 7 figures in bitcoin. I would say there is some general advice, and some crypto-specific advice.

General advice:

• Rebalance in bull markets, now certainly wouldn't be the worst time. Take some profits and move it to unrelated investments, clear debt, secure a home if you haven't already - the usual sensible things to do. How much should you sell? I don't know, depends on your conviction, your risk appetite and your general financial situation. I would say that systemic risk to bitcoin is getting pretty low by now, but there can always be unknown unknowns regardless - that's why you diversify.
• Tell as few people as possible even family and friends, even though part of you may want to tell everyone you meet.

Crypto-specific advice:

• This is the most important one. Know the risks and tradeoffs of different custody methods and sort out your custody strategy accordingly. You have three main risks 1) you use a 3rd party and they fail 2) you self custody and you lose your keys 3) you get hacked. You should use at least one hardware wallet for self custody and perhaps even a mix of self custody and a third party. Put as much research and planning into this as the size of your stash warrants.
• Never sell it all.
• When selling, you can do it in small chunks so that you never risk having too much on an exchange at any one time.
• You will likely run into some trad-fi friction when moving significant amounts from an exchange, maybe notify them up front that you'll be doing it.
• Don't talk about it online with any account that can be linked to your real identity.
• If you have dependants and are self-custodying significant funds figure out a succession strategy.

I guess if you have successfully reached this point with a substantial stack you probably are savy enough to know all of the above anyway, but I don't know maybe it helps someone.

 

[ClubMan]

• Never sell it all.
• When selling ...

This seems contradictory?

 

[DublinHead54]

Isn't the obvious answer sell some of it?

This is just basic investing principles and personal circumstance, and nothing to do with Bitcoin.

In relative terms if you have made multiples on your initial investment there is no rational logic to not sell and take profits.

 

[Bronte]

Hi tecate

I think that this is a very important point. In one of the other threads a poster has told us that he has millions in his BTC account.

Fair play to him.

What would you advise a 30 year old who owns BTC with a market value of €3m to do? Assuming they have no other assets.

Brendan

With 3 million they should go to a financial advisor and not be stupid and keep everything in Bitcoin.

Though if they are clever enough to make 3 million I suppose they should keep it in Bitcoin and double it to 6 million.

 

[thedaddyman]

With 3 million they should go to a financial advisor and not be stupid and keep everything in Bitcoin.

Though if they are clever enough to make 3 million I suppose they should keep it in Bitcoin and double it to 6 million.

Until the next time it crashes and drops to 300k

Clear debt and diversify the portfolio, same as an investment manager worth his salt would say to a prospective client. After all, look at all the people who only had shares in Anglo Irish.

 

[Gordon Gekko]

They only see upside. Classic naive investor behaviour.

Let’s say they have €3m and sell €2.7m and keep €300k.

The mania around this rubbish is such that they see the perceived loss of a bigger gain if it goes 10x rather than the downside protection.

 

[Brendan Burgess]

The mania around this rubbish is such that they see the perceived loss of a bigger gain if it goes 10x rather than the downside protection.

That is the problem with shares as well.

I have sold shares when they increased, not because I was making a call on their value, but because I had become overweight in them.

Rationally, I know it's the right thing to do. But then the shares continue climbing and I have mixed feelings. On the one hand, I regret having sold them but on the other, I am glad that they are still rising as I still have a substantial holding.

Brendan