If you are referring to current spot prices then we are talking about 92.6 bitcoin.


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.


I don't have any problem with the idea of selling 2% of the BTC quarterly or even 8% annually based on the quantity of BTC, and previously, I had considered BTC management in those kinds of terms that would withdraw that BTC at those kinds of rates, yet in recent times, I have considered using the 200-WMA to value the coins and then to withdraw based on similar ideas but using the dollar value 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.  In recent times, I had just been using a 7% per year presumed debasement of the dollar (or interest rates) for round about convenience in regards to what might be a fair estimate regarding how much the dollar might be going down in value on a yearly basis.  

My own sustainable withdrawal webpages and sustainable withdrawal tool has not really accounted for some of my current thinking on the matter that involves pegging to dollar value rather than pegging to quantity of BTC, even though there is enough information in the generated data that come from my sustainable withdrawal tool that these kinds of steady and reasonable dollar-based withdrawal formulas can be figured out.. and to sure that they are sustainable.

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 sustainable 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.


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.


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.


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.

Sure, it is possible that such bitcoin accumulator HODLer could have had developed those various characteristics, yet I still get the sense that you are imagining a lot about mindset.. and surely I would have had thought that it might be more concrete to focus on various ways that such a guy might have had gotten to such a level.. and you don't even really proclaim a timeset in which such a guy might have had gotten to such a stage.

Perhaps we can attempt to imagine a guy who started in bitcoin in mid 2014.... and so maybe we are imagining a guy who ONLY bought bitcoin but never sold any (except maybe spend and replace), so then that would be an investment timeline of 11 years... Sure , 9 or 10 years could also work, but if we reduce the timeline, then it might cause difficulties to achieve 92.6 BTC - especially for somewhat normal people... yet as I tried to suggest I still find the amount accumulated to be quite a bit and also your assumption about the guy just all of sudden getting to 92.6 BTC seems a bit of a fantasy too, even though surely I can imagine some scenarios in which such a thing might have had happened.

Even though I am cooperating with you, I am still a bit frustrated to feel that I need to give some examples in order to potentially describe some ways in which a guy might get to that 92.6 BTC amount and ONLY now start to consider transitioning into some kind of a sustainable withdrawal status... and I also believe that you could have had come up with some kind of a vision of a guy that is more specific about what he did, what were his financial limitations and perhaps considering some goals that he might have had from the start.. so then sure, we might see the various ways that bitcoin might have had changed him, but still it seems more plausible to put it into a framework of specific acts rather than retaining vagueries within a description of how he feels about his having had gotten to 92.6 BTC.

My assumption is going to be that each of the hypothetical guys had an income of somewhere in the ballpark of $100k per year, and perhaps a goal to get to a status in which he would be able to withdraw $200k per year with a kind of passive income.  I will warn in advance that I think that none of these work, because from my own point of view even in the most conservative of scenarios the guy stocked up way too many BTC in terms of his stated goals, and even a guy with a $100k per year income seems a bit unrealistic in terms of attempting to appeal to normal people.. .. but anyhow, I am trying to work with your example to the extent that you have provided any details, I am just getting that he has $10 million spot price bitcoin right now... so then what to do about it, might relate to how he got to such a point and what his original goals might have had been.. and were such goals realistic?.. or maybe a more plausible rationale is that he lost track of how many bitcoin he had, but that hardly makes sense, either... but let me see what I can do to attempt to work with what you have provided, so far.

Maybe also we can say that the guy is about mid-30s when he heard about bitcoin, so he had perhaps been investing in various traditional investments for 10 years, and so he had invested about one whole year of his income and perhaps there were matching funds and various kinds of price appreciation, so perhaps his total investment portfolio is around $200k at the time he gets started in bitcoin  (we are talking mid 2014).

Hypothetical 1 (we will refer to him as a front loader).. So he may well buy his BTC in various chunks until he gets to 92.6... and since he is a front loader, he may well be taking from other parts of his investment portfolio and/or combining that with his income.. so maybe he invests around $15k the first couple of times and $8k the third time.. looking something like this.

Buy 1 - $15k June 2014 - $600 per BTC - 25 BTC
Buy 2 - $15k November 2014 - $380 per BTC - 40 BTC
Buy 3 - $8k October 2015 - $280 per BTC - 27.6 BTC

Total invested $38k

Hypothetical 2 (we will refer to him as the DCAer).. So he just started buying BTC at about $221 per week, and over the past 11 years he may well have had invested $125k into bitcoin.
 
Of course, there can be several variants in between, yet I still have trouble understanding how either of these guys would just start to feel that they need to enter into the withdrawal stage of their investment into bitcoin.

Perhaps a more plausible version might have had been someone who might have already realized that he could start withdrawing, so he started withdrawing a while back, since if a guy wanted to withdraw at $200k per year, then under traditional valuations, his holdings would have had needed to get to right around $5 million, and if the guy had 92.6 BTC, then his BTC spot price holdings would have had crossed over such valuation at around $54k, and we crossed over $54k a couple times in 2021 and got stuck around there for a good amount of time in 2024, and so now we are double that $54k price, and surely that is part of my own reluctance to want to be using spot prices in order to figure out valuation, yet  even the guy could have had started some kind of a 4% per year withdrawal rate in early 2021, and he would still have right around 77.3 bitcoin right now, and over the past 4.5-ish years, he would have had cashed out right around $730k .

And, yeah, I know that I am changing aspects of your facts, but even a guy with 77.3 BTC currently would have a 200-WMA value of right around $3.8 million and a spot price valuation of $8.4 million, so I would consider that based on the 200-WMA valuation that he would be able to sustainably withdraw right around $380k per year. So even this guy who already started withdrawing 4.5 years ago would have had still retained much of the value of his holdings if he had merely withdrew at the traditional withdrawal rate of 4% and I personally think that if we use the 200-WMA and we price the withdrawals in dollars, then we could sustainably withdraw 10% of the 200-WMA value of the holdings, so long as the BTC spot price were to stay at least 25% higher than the 200-WMA.

Hopefully I have beat up upon some of these ideas enough, even though I continue to think that you, Tungbulu, could have had provided some kind of a better semblance of your own ideas, so that it might be more concrete what you are talking about rather than just vaguely referring to a guy suddenly having 92.6 BTC..,. even though for sure if the guy started early enough, such as 11 years ago, then there could be a variety of scenarios to get to 92.6 BTC...and the shorter we make the timeline, thent it might hav had been more difficult to get to such quantity of BTC absent perhaps some heavier front-loading and/or some various buying on dips, not expecting that the guy necessarily hit the bottom within his various BTC buys on dips, even  though there could be some realistic ways to combine buying on the dip and regular DCA, and to still have relatively short timelines that might even be less than 2 cycles. (2 cycles putting us back to a mid-2017 starting timeline).


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..

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).

 

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.

 

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.