Exit strategy for bitcoin

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
User avatar
Lauretta
Posts: 670
Joined: Wed Jul 05, 2017 6:27 am

Exit strategy for bitcoin

Post by Lauretta » Wed Jan 17, 2018 11:25 pm

I bought about 0,3% of my liquid worth in bitcoin some time ago (it was because of FOMO really, and I was aware that it was just a gamble, but I was also encouraged by seeing that people like Ben Carlson, Joshua Brown etc had also bought some bitcoin to 'experiment' as Brown put it).
I remember Jason Zweig saying that if you buy bitcoin you should have an exit strategy. But what is a reasonable exit strategy for bitcoin? For the stock market I've seen people use 1 year momentum or say 200 days moving averages to do trend following, but bitcoin is so volatile in the short term that I don't think these strategies would work. So do you think that setting oneself a lower limit at which one would sell (since after all bitcoin could go to zero) is a good plan? Or perhaps using some kind of trend following like moving averages, but with a shorter time horizon?
When everyone is thinking the same, no one is thinking at all

User avatar
unclescrooge
Posts: 2273
Joined: Thu Jun 07, 2012 7:00 pm

Re: Exit strategy for bitcoin

Post by unclescrooge » Wed Jan 17, 2018 11:29 pm

Your exit strategy is to bail when it was at $20,000. Failing that, I would bail ASAP.

User avatar
Lauretta
Posts: 670
Joined: Wed Jul 05, 2017 6:27 am

Re: Exit strategy for bitcoin

Post by Lauretta » Wed Jan 17, 2018 11:34 pm

unclescrooge wrote:
Wed Jan 17, 2018 11:29 pm
Your exit strategy is to bail when it was at $20,000. Failing that, I would bail ASAP.
I hadn't bought it yet when it was at 20K$! :D I bought it when it had fallen at ~ 15K$ and thought I had made a bargain! :D :oops:
When everyone is thinking the same, no one is thinking at all

User avatar
Pajamas
Posts: 6015
Joined: Sun Jun 03, 2012 6:32 pm

Re: Exit strategy for bitcoin

Post by Pajamas » Wed Jan 17, 2018 11:42 pm

Lauretta wrote:
Wed Jan 17, 2018 11:34 pm
unclescrooge wrote:
Wed Jan 17, 2018 11:29 pm
Your exit strategy is to bail when it was at $20,000. Failing that, I would bail ASAP.
I hadn't bought it yet when it was at 20K$! :D I bought it when it had fallen at ~ 15K$ and thought I had made a bargain! :D :oops:
Maybe double down since it is an even better bargain now? :oops:

User avatar
Watty
Posts: 13466
Joined: Wed Oct 10, 2007 3:55 pm

Re: Exit strategy for bitcoin

Post by Watty » Wed Jan 17, 2018 11:53 pm

Lauretta wrote:
Wed Jan 17, 2018 11:34 pm
unclescrooge wrote:
Wed Jan 17, 2018 11:29 pm
Your exit strategy is to bail when it was at $20,000. Failing that, I would bail ASAP.
I hadn't bought it yet when it was at 20K$! :D I bought it when it had fallen at ~ 15K$ and thought I had made a bargain! :D :oops:
Then sell it even faster. If you were not able to time the original purchase there is no reason to think that your market forecasting skills have improved. (I don't have a clue what it will do.)

I would assume that would qualify for a capital loss that would have some tax advantages.

User avatar
White Coat Investor
Posts: 13329
Joined: Fri Mar 02, 2007 9:11 pm
Location: Greatest Snow On Earth

Re: Exit strategy for bitcoin

Post by White Coat Investor » Wed Jan 17, 2018 11:57 pm

If you thought it was worth buying at $15K, why aren't you backing up the truck now?

Investments are the only thing people like to buy after they go up in price.

I have no idea where it goes next, but I'm glad I'm on the sidelines. I'd be laying awake at night if I actually owned any of this stuff.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

User avatar
Lauretta
Posts: 670
Joined: Wed Jul 05, 2017 6:27 am

Re: Exit strategy for bitcoin

Post by Lauretta » Wed Jan 17, 2018 11:58 pm

Pajamas wrote:
Wed Jan 17, 2018 11:42 pm
Lauretta wrote:
Wed Jan 17, 2018 11:34 pm
unclescrooge wrote:
Wed Jan 17, 2018 11:29 pm
Your exit strategy is to bail when it was at $20,000. Failing that, I would bail ASAP.
I hadn't bought it yet when it was at 20K$! :D I bought it when it had fallen at ~ 15K$ and thought I had made a bargain! :D :oops:
Maybe double down since it is an even better bargain now? :oops:
:D I think I'll give that one a miss :D
When everyone is thinking the same, no one is thinking at all

User avatar
Lauretta
Posts: 670
Joined: Wed Jul 05, 2017 6:27 am

Re: Exit strategy for bitcoin

Post by Lauretta » Thu Jan 18, 2018 12:06 am

White Coat Investor wrote:
Wed Jan 17, 2018 11:57 pm
If you thought it was worth buying at $15K, why aren't you backing up the truck now?

Investments are the only thing people like to buy after they go up in price.

I have no idea where it goes next, but I'm glad I'm on the sidelines. I'd be laying awake at night if I actually owned any of this stuff.
It was just a gamble with play money; of course I have no idea what it's worth - probably noone does :confused . Actually I'm awake and it's night here - but I'm not laying and it's not because of Bitcoin :D : I got up early as I'm catching a plane. It's no big deal if I lose that money (I saved much more in fees for one single year simply by avoiding a money manager and learning to invest myself, also thanks to this website :happy ) - also, thanks to this experience I will have learnt that it's not a good idea to speculate.
When everyone is thinking the same, no one is thinking at all

david
Posts: 152
Joined: Thu Jan 03, 2013 12:39 am

Re: Exit strategy for bitcoin

Post by david » Thu Jan 18, 2018 12:08 am

Lauretta wrote:
Wed Jan 17, 2018 11:25 pm
I bought about 0,3% of my liquid worth in bitcoin some time ago (it was because of FOMO really, and I was aware that it was just a gamble, but I was also encouraged by seeing that people like Ben Carlson, Joshua Brown etc had also bought some bitcoin to 'experiment' as Brown put it).
I remember Jason Zweig saying that if you buy bitcoin you should have an exit strategy. But what is a reasonable exit strategy for bitcoin? For the stock market I've seen people use 1 year momentum or say 200 days moving averages to do trend following, but bitcoin is so volatile in the short term that I don't think these strategies would work. So do you think that setting oneself a lower limit at which one would sell (since after all bitcoin could go to zero) is a good plan? Or perhaps using some kind of trend following like moving averages, but with a shorter time horizon?
What do you want from bitcoin? As in, why is it in your portfolio? Is it there as an "asset class" that might be uncorrelated to the market, REIT, and bond holdings you already have? If you're holding it as an uncorrelated asset, you may want to hold long term.

You say it was just a gamble. This is a problem because there is no clear reason why you are holding it, and thus, there is no clear reason to still hold it.

For the stock market, why would you use 1 year momentum or 200 day moving averages? As in, what is the ultimate goal? A reason to bail on the speculation? I think a similar strategy can work, I guess, for bitcoin, though you're likely liable to lose a bunch of money on that strategy. The 200 day moving average for bitcoin is around 7100. It hasn't hit it yet.

I think there is some reason to think of holding bitcoin long term. It could do well, get picked up and actually adopted, etc. It may be uncorrelated with other assets (I have no clue).

If you choose short term speculation, anything is possible.

What I think you should do is pick a path. Short or long term. If long term, treat it as part of your portfolio, figure out the % you want in it and re-balance to that (though, I'd caution to not re-balance into it, but rather move out somewhat if it gets hot). If short term, what is your pain point on the low side? Is it the 200 day moving average? 10k? Now? If it hits that, get out. If it shoots up, start taking money off the table.

User avatar
Lauretta
Posts: 670
Joined: Wed Jul 05, 2017 6:27 am

Re: Exit strategy for bitcoin

Post by Lauretta » Thu Jan 18, 2018 12:23 am

david wrote:
Thu Jan 18, 2018 12:08 am
Lauretta wrote:
Wed Jan 17, 2018 11:25 pm
I bought about 0,3% of my liquid worth in bitcoin some time ago (it was because of FOMO really, and I was aware that it was just a gamble, but I was also encouraged by seeing that people like Ben Carlson, Joshua Brown etc had also bought some bitcoin to 'experiment' as Brown put it).
I remember Jason Zweig saying that if you buy bitcoin you should have an exit strategy. But what is a reasonable exit strategy for bitcoin? For the stock market I've seen people use 1 year momentum or say 200 days moving averages to do trend following, but bitcoin is so volatile in the short term that I don't think these strategies would work. So do you think that setting oneself a lower limit at which one would sell (since after all bitcoin could go to zero) is a good plan? Or perhaps using some kind of trend following like moving averages, but with a shorter time horizon?
What do you want from bitcoin? As in, why is it in your portfolio? Is it there as an "asset class" that might be uncorrelated to the market, REIT, and bond holdings you already have? If you're holding it as an uncorrelated asset, you may want to hold long term.

You say it was just a gamble. This is a problem because there is no clear reason why you are holding it, and thus, there is no clear reason to still hold it.

For the stock market, why would you use 1 year momentum or 200 day moving averages? As in, what is the ultimate goal? A reason to bail on the speculation? I think a similar strategy can work, I guess, for bitcoin, though you're likely liable to lose a bunch of money on that strategy. The 200 day moving average for bitcoin is around 7100. It hasn't hit it yet.

I think there is some reason to think of holding bitcoin long term. It could do well, get picked up and actually adopted, etc. It may be uncorrelated with other assets (I have no clue).

If you choose short term speculation, anything is possible.

What I think you should do is pick a path. Short or long term. If long term, treat it as part of your portfolio, figure out the % you want in it and re-balance to that (though, I'd caution to not re-balance into it, but rather move out somewhat if it gets hot). If short term, what is your pain point on the low side? Is it the 200 day moving average? 10k? Now? If it hits that, get out. If it shoots up, start taking money off the table.
Hi David,
the truth is that I bought because it went up so much, so I bought it 'just in case' it continues to go up at a similar rate. I don't think it will have a use as a currency, but I like the argument that it should be considered a commodity and it might perhaps replace gold, in which case it still has a lot of possible gains to offer:
http://www.breakingbitcoin.com/notes/le ... n-bitcoin/

For the stock market people use 1yr momentum or 200 SMA because it works and there are behavioural biases that explain it (underreaction, overreaction, herding etc).

I think bitcoin moves so quickly that those signals are probably useless for it.
When everyone is thinking the same, no one is thinking at all

User avatar
Lauretta
Posts: 670
Joined: Wed Jul 05, 2017 6:27 am

Re: Exit strategy for bitcoin

Post by Lauretta » Thu Jan 18, 2018 12:27 am

Watty wrote:
Wed Jan 17, 2018 11:53 pm


I would assume that would qualify for a capital loss that would have some tax advantages.
Great point! I hadn't thought of that, thanks! :happy
When everyone is thinking the same, no one is thinking at all

stimulacra
Posts: 238
Joined: Wed Dec 21, 2016 3:50 pm
Location: Houston

Re: Exit strategy for bitcoin

Post by stimulacra » Thu Jan 18, 2018 1:02 am

If owning bitcoin to diversify your asset allocation… it might make sense to diversify across 5-10 different cryptocurrencies. I'm not sure if bitcoin is here to stay but do think crypto/blockchain will be… 

I'm considering a 1% allocation at some point after a major price correction (thinking 80-90% decline) to augment the role of precious metals currently holds in my AA.

Not feeling any FOMO though… just spending time learning and observing.

User avatar
woof755
Posts: 3155
Joined: Sun Aug 05, 2007 2:03 pm
Location: Honolulu

Re: Exit strategy for bitcoin

Post by woof755 » Thu Jan 18, 2018 1:38 am

This is why I do not believe in "play money" and I don't have any allowance for it in my asset allocation.

If I want to gamble, I know how to access those sites. My investing is data-driven.
"By singing in harmony from the same page of the same investing hymnal, the Diehards drown out market noise." | | --Jason Zweig, quoted in The Bogleheads' Guide to Investing

mwm158
Posts: 475
Joined: Sat Jun 25, 2011 6:55 pm

Re: Exit strategy for bitcoin

Post by mwm158 » Thu Jan 18, 2018 6:31 am

.....
Last edited by mwm158 on Sat Jan 20, 2018 3:43 pm, edited 1 time in total.

User avatar
oldcomputerguy
Posts: 3126
Joined: Sun Nov 22, 2015 6:50 am
Location: In the middle of five acres of woods

Re: Exit strategy for bitcoin

Post by oldcomputerguy » Thu Jan 18, 2018 6:58 am

Lauretta wrote:
Wed Jan 17, 2018 11:34 pm
unclescrooge wrote:
Wed Jan 17, 2018 11:29 pm
Your exit strategy is to bail when it was at $20,000. Failing that, I would bail ASAP.
I hadn't bought it yet when it was at 20K$! :D I bought it when it had fallen at ~ 15K$ and thought I had made a bargain! :D :oops:
This was the "strategy" I followed when I bought an energy-sector ETF a couple of years ago; it had fallen to an unbelievable low, and I bought in at that point, thinking it simply had to rebound. Then it went lower as the energy sector imploded. Same for a biotech mutual fund; it was hot, I bought in (partially because DW worked peripherally in that field), then it sunk. I learned my lesson about sector investing, and since then have only invested broad-market. It only cost me about $5k, a cheap lesson at the price.

To the OP: get out now. Take your licks, and go forward.
It’s taken me a lot of years, but I’ve come around to this: If you’re dumb, surround yourself with smart people. And if you’re smart, surround yourself with smart people who disagree with you.

User avatar
Lauretta
Posts: 670
Joined: Wed Jul 05, 2017 6:27 am

Re: Exit strategy for bitcoin

Post by Lauretta » Thu Jan 18, 2018 8:09 am

oldcomputerguy wrote:
Thu Jan 18, 2018 6:58 am


This was the "strategy" I followed when I bought an energy-sector ETF a couple of years ago; it had fallen to an unbelievable low, and I bought in at that point, thinking it simply had to rebound. Then it went lower as the energy sector imploded. Same for a biotech mutual fund; it was hot, I bought in (partially because DW worked peripherally in that field), then it sunk. I learned my lesson about sector investing, and since then have only invested broad-market. It only cost me about $5k, a cheap lesson at the price.

To the OP: get out now. Take your licks, and go forward.
Yes, it's like in this video starting at about 1:10 :D
https://www.youtube.com/watch?v=f74MweTRICM
When everyone is thinking the same, no one is thinking at all

User avatar
Lauretta
Posts: 670
Joined: Wed Jul 05, 2017 6:27 am

Re: Exit strategy for bitcoin

Post by Lauretta » Thu Jan 18, 2018 8:13 am

stimulacra wrote:
Thu Jan 18, 2018 1:02 am
If owning bitcoin to diversify your asset allocation… it might make sense to diversify across 5-10 different cryptocurrencies. I'm not sure if bitcoin is here to stay but do think crypto/blockchain will be… 
sounds like a good idea but too time consuming for me - it took me a whole week-end just to figure out how to buy bitcoin, which were the best and safest platforms etc.
When everyone is thinking the same, no one is thinking at all

Shallowpockets
Posts: 605
Joined: Fri Nov 20, 2015 10:26 am

Re: Exit strategy for bitcoin

Post by Shallowpockets » Thu Jan 18, 2018 8:17 am

You might want to go over the mechanics of selling. How liquid is it? Can you sell it like you can sell a stock?
Once you decided to buy your Bitcoin, how long before you actually had it in your account?
Perhaps the same timeframe may apply to sell it. Unless it keeps plummeting and there are more sellers than buyers.
How much have you made so far on it? Don't be greedy. No one lost by taking a profit.
Did you buy at 15k? Is t it well under that now.
You need to know the mechanics and timing to sell.

User avatar
midareff
Posts: 5645
Joined: Mon Nov 29, 2010 10:43 am
Location: Biscayne Bay, South Florida

Re: Exit strategy for bitcoin

Post by midareff » Thu Jan 18, 2018 8:34 am

I'd say there are three options. First, get out any time it is selling for more than you paid for it. Second, get out before it drops further. Third, understand the true meaning and origin of the saying; "once bitten twice shy" and stay away from so called investments that do not have a money making product or business service associated with them. Lick wounds, live to fight another day.

User avatar
queso
Posts: 561
Joined: Thu Jan 07, 2016 3:52 pm

Re: Exit strategy for bitcoin

Post by queso » Thu Jan 18, 2018 8:44 am

There is no exit strategy! HODL!!!!!!!!!!!!!!!!!!!!!!!

ok, sorry, had to get that out. I tried screaming that at the wife when she was lol'ing at me as all 7 of my game changing globally disruptive non-fiat currencies that are going to change the way the world exchanges money and bring banking to the unbanked fake internet monies were tanking. No exit strategy here. Kind of glad I didn't blow my ETH on one of those cool digital cat pictures though. That somehow seemed stupider than fake internet money. Cuter though.

User avatar
Watty
Posts: 13466
Joined: Wed Oct 10, 2007 3:55 pm

Re: Exit strategy for bitcoin

Post by Watty » Thu Jan 18, 2018 9:46 am

stimulacra wrote:
Thu Jan 18, 2018 1:02 am
If owning bitcoin to diversify your asset allocation…
Buying Bitcoin(or similar) is not diversifying your portfolio anymore than buying lottery tickets would be.

CnC
Posts: 531
Joined: Thu May 11, 2017 12:41 pm

Re: Exit strategy for bitcoin

Post by CnC » Thu Jan 18, 2018 10:31 am

Interested in how this plays out.

User avatar
grayfox
Posts: 4927
Joined: Sat Sep 15, 2007 4:30 am

Re: Exit strategy for bitcoin

Post by grayfox » Thu Jan 18, 2018 10:36 am

Lauretta wrote:
Wed Jan 17, 2018 11:25 pm
I bought about 0,3% of my liquid worth in bitcoin some time ago (it was because of FOMO really, and I was aware that it was just a gamble, but I was also encouraged by seeing that people like Ben Carlson, Joshua Brown etc had also bought some bitcoin to 'experiment' as Brown put it).
I remember Jason Zweig saying that if you buy bitcoin you should have an exit strategy. But what is a reasonable exit strategy for bitcoin? For the stock market I've seen people use 1 year momentum or say 200 days moving averages to do trend following, but bitcoin is so volatile in the short term that I don't think these strategies would work. So do you think that setting oneself a lower limit at which one would sell (since after all bitcoin could go to zero) is a good plan? Or perhaps using some kind of trend following like moving averages, but with a shorter time horizon?
Just make it your coffee fund. I saw a video from 2013 where people were paying for coffee and buying lunch and everything with bitcoin. That was about five years ago, so by now it must be accepted everywhere.

TheHouse7
Posts: 292
Joined: Fri Jan 13, 2017 2:40 am

Re: Exit strategy for bitcoin

Post by TheHouse7 » Thu Jan 18, 2018 10:37 am

Watty wrote:
Thu Jan 18, 2018 9:46 am
stimulacra wrote:
Thu Jan 18, 2018 1:02 am
If owning bitcoin to diversify your asset allocation…
Buying Bitcoin(or similar) is not diversifying your portfolio anymore than buying lottery tickets would be.
Bingo, sell bitcoin like throwing away expired lottery tickets(when you're done following it)
"PSX will always go up 20%, why invest in anything else?!" -Father-in-law early retired.

an_asker
Posts: 2134
Joined: Thu Jun 27, 2013 2:15 pm

Re: Exit strategy for bitcoin

Post by an_asker » Thu Jan 18, 2018 10:40 am

Lauretta wrote:
Thu Jan 18, 2018 12:06 am
White Coat Investor wrote:
Wed Jan 17, 2018 11:57 pm
If you thought it was worth buying at $15K, why aren't you backing up the truck now?

Investments are the only thing people like to buy after they go up in price.

I have no idea where it goes next, but I'm glad I'm on the sidelines. I'd be laying awake at night if I actually owned any of this stuff.
It was just a gamble with play money; of course I have no idea what it's worth - probably noone does :confused . Actually I'm awake and it's night here - but I'm not laying and it's not because of Bitcoin :D : I got up early as I'm catching a plane. It's no big deal if I lose that money (I saved much more in fees for one single year simply by avoiding a money manager and learning to invest myself, also thanks to this website :happy ) - also, thanks to this experience I will have learnt that it's not a good idea to speculate.
If it is a gamble, then leave it as is. Who knows, maybe it will become a billion in the next decade or two. :oops:

stimulacra
Posts: 238
Joined: Wed Dec 21, 2016 3:50 pm
Location: Houston

Re: Exit strategy for bitcoin

Post by stimulacra » Thu Jan 18, 2018 10:56 am

Watty wrote:
Thu Jan 18, 2018 9:46 am
stimulacra wrote:
Thu Jan 18, 2018 1:02 am
If owning bitcoin to diversify your asset allocation…
Buying Bitcoin(or similar) is not diversifying your portfolio anymore than buying lottery tickets would be.
Not bitcoin specifically but doesn't cryptocurrency as a whole have the potential to be a new non-correlated asset class that might be worth investing in, in proportion to its total market cap? That was my intent in the above statement.

ksualum
Posts: 77
Joined: Mon Jan 15, 2018 3:01 pm

Re: Exit strategy for bitcoin

Post by ksualum » Thu Jan 18, 2018 12:35 pm

My opinion . . . if you don't need the money, I would just see what happens or you can cut your losses, learn your lesson and move on. Cryptocurrencies are incredibly volatile. It could go to $0 today or up to $20,000 tomorrow. Its all pure speculation. In the .com craze a lot of people lost a lot of money. I think the blockchain technology is not going away. I am not sure these cryptocurrencies are worth anything but some people obviously think they are. Maybe a cryptocurrency index fund will come along, and then you could just try to be average in this particular space, but I agree with others that all of this crypto stuff could be worth nothing. With so many different cryptos, I have no idea how people think they pick the right one. Another option is to buy and read Devil Take the Hindmost: A History of Financial Speculation by Chancellor. It is a very interesting read. Speculation is nothing new, but my guess is you aren't going to get a lot of support for bitcoin or crypto on this forum.

tesuzuki2002
Posts: 432
Joined: Fri Dec 11, 2015 12:40 pm

Re: Exit strategy for bitcoin

Post by tesuzuki2002 » Thu Jan 18, 2018 12:50 pm

Lauretta wrote:
Wed Jan 17, 2018 11:34 pm
unclescrooge wrote:
Wed Jan 17, 2018 11:29 pm
Your exit strategy is to bail when it was at $20,000. Failing that, I would bail ASAP.
I hadn't bought it yet when it was at 20K$! :D I bought it when it had fallen at ~ 15K$ and thought I had made a bargain! :D :oops:
You got a steal. Wait till it goes to $7K and pick up more. :oops:

stimulacra
Posts: 238
Joined: Wed Dec 21, 2016 3:50 pm
Location: Houston

Re: Exit strategy for bitcoin

Post by stimulacra » Thu Jan 18, 2018 12:50 pm

ksualum wrote:
Thu Jan 18, 2018 12:35 pm
Another option is to buy and read Devil Take the Hindmost: A History of Financial Speculation by Chancellor. It is a very interesting read. Speculation is nothing new, but my guess is you aren't going to get a lot of support for bitcoin or crypto on this forum.
Thanks for the recommendation. Added to my 2018 reading list :)

thangngo
Posts: 1129
Joined: Sun Feb 26, 2017 2:08 pm

Re: Exit strategy for bitcoin

Post by thangngo » Thu Jan 18, 2018 12:53 pm

Lauretta wrote:
Wed Jan 17, 2018 11:25 pm
I bought about 0,3% of my liquid worth in bitcoin some time ago (it was because of FOMO really, and I was aware that it was just a gamble, but I was also encouraged by seeing that people like Ben Carlson, Joshua Brown etc had also bought some bitcoin to 'experiment' as Brown put it).
I remember Jason Zweig saying that if you buy bitcoin you should have an exit strategy. But what is a reasonable exit strategy for bitcoin? For the stock market I've seen people use 1 year momentum or say 200 days moving averages to do trend following, but bitcoin is so volatile in the short term that I don't think these strategies would work. So do you think that setting oneself a lower limit at which one would sell (since after all bitcoin could go to zero) is a good plan? Or perhaps using some kind of trend following like moving averages, but with a shorter time horizon?
Gamblers use their guts. Throw away any analysis, chart, news article, etc. You are out to get profit from other crypto traders. Don't quit until you make profits. :oops:

gotester2000
Posts: 502
Joined: Sun Nov 12, 2017 1:59 am

Re: Exit strategy for bitcoin

Post by gotester2000 » Thu Jan 18, 2018 12:59 pm

Simple bitcoin speculation strategy -
1. Buy at price A - do not catch a falling knife unless trend reversal is confirmed.
2. Put a stop loss at B%.
3. Sell X% of bitcoin for every Y% increase in its value.

Nobody knows how much bitcoin will gain or fall but I see no harm in putting 1% of your corpus in it. If you have a strategy you can make serious money with limited downside - though it is not a typical boglehead way.

ksualum
Posts: 77
Joined: Mon Jan 15, 2018 3:01 pm

Re: Exit strategy for bitcoin

Post by ksualum » Thu Jan 18, 2018 1:03 pm

stimulacra wrote:
Thu Jan 18, 2018 12:50 pm
ksualum wrote:
Thu Jan 18, 2018 12:35 pm
Another option is to buy and read Devil Take the Hindmost: A History of Financial Speculation by Chancellor. It is a very interesting read. Speculation is nothing new, but my guess is you aren't going to get a lot of support for bitcoin or crypto on this forum.
Thanks for the recommendation. Added to my 2018 reading list :)
No problem! Just so you know the book is not about crypto, but it does walk you back from taking the leap into anything with this much speculation . . . . most of these things have turned out really badly for people historically

uncertainty
Posts: 34
Joined: Sun Dec 16, 2012 2:36 pm

Re: Exit strategy for bitcoin

Post by uncertainty » Thu Jan 18, 2018 2:21 pm

Watty wrote:
Thu Jan 18, 2018 9:46 am
stimulacra wrote:
Thu Jan 18, 2018 1:02 am
If owning bitcoin to diversify your asset allocation…
Buying Bitcoin(or similar) is not diversifying your portfolio anymore than buying lottery tickets would be.
That's what I call confidence :beer
stimulacra wrote:
Thu Jan 18, 2018 10:56 am
Watty wrote:
Thu Jan 18, 2018 9:46 am
stimulacra wrote:
Thu Jan 18, 2018 1:02 am
If owning bitcoin to diversify your asset allocation…
Buying Bitcoin(or similar) is not diversifying your portfolio anymore than buying lottery tickets would be.
Not bitcoin specifically but doesn't cryptocurrency as a whole have the potential to be a new non-correlated asset class that might be worth investing in, in proportion to its total market cap? That was my intent in the above statement.
Yes, absolutely. Crypto is solving problems that have, up til now, been impossible to solve. There are many use cases for blockchain (and similar technologies) that are being developed by some of the brightest minds in the business and tech communities.

Which coins retain their value and which drop to 0 is the real debate. If you find out please let me know so I can adjust accordingly :happy

Just one example of the potential: https://qz.com/1163660/brazil-may-write ... lockchain/

ryman554
Posts: 1058
Joined: Sun Jan 12, 2014 9:44 pm

Re: Exit strategy for bitcoin

Post by ryman554 » Thu Jan 18, 2018 3:04 pm

Lauretta wrote:
Thu Jan 18, 2018 12:23 am
the truth is that I bought because it went up so much, so I bought it 'just in case' it continues to go up at a similar rate. I don't think it will have a use as a currency, but I like the argument that it should be considered a commodity and it might perhaps replace gold, in which case it still has a lot of possible gains to offer:
http://www.breakingbitcoin.com/notes/le ... n-bitcoin/

For the stock market people use 1yr momentum or 200 SMA because it works and there are behavioural biases that explain it (underreaction, overreaction, herding etc).

I think bitcoin moves so quickly that those signals are probably useless for it.
I am going to be blunt.

Here is your exit strategy. Sell you bitcoin and call your loss "tuition"

You learned something. You learned that you are a terrible stock picker for all of the reasons highlighted in your reply. You bought high. Because "you heard" that some "techinical indicator" says so, and justifies the poor result because "you think" it may not apply after all.

It's OK. 100% of us on this board are terrible stock pickers, too, it's just that only 80% of us know it. Day trading is taken over by supercomputers, and the long term performance of anything is subject to the chaotic whims of the butterflies of the world.

There is but one redeeming factor: there is momentum historically toward future growth, as the human race has this spark to always look to build a better widget -- and to make a buck -- that, on average, keeps the money printing engine going.

Because things grow, and it's impossible to predict where the growth will occur, please buy everything. Dont pick and choose, don't try to time it, don't get cute. Just buy everything and focus on improving your life elsewhere.

If you want to gamble on bitcoin, go for it. But don't then come asking about exit or trading strategies. Because the original strategy of buying was flawed to begin with.

tesuzuki2002
Posts: 432
Joined: Fri Dec 11, 2015 12:40 pm

Re: Exit strategy for bitcoin

Post by tesuzuki2002 » Thu Jan 18, 2018 3:06 pm

Lauretta wrote:
Wed Jan 17, 2018 11:34 pm
unclescrooge wrote:
Wed Jan 17, 2018 11:29 pm
Your exit strategy is to bail when it was at $20,000. Failing that, I would bail ASAP.
I hadn't bought it yet when it was at 20K$! :D I bought it when it had fallen at ~ 15K$ and thought I had made a bargain! :D :oops:
Sell it all!! Then watch it go to $40K.

harvestbook
Posts: 426
Joined: Sat Mar 18, 2017 7:12 pm

Re: Exit strategy for bitcoin

Post by harvestbook » Thu Jan 18, 2018 3:09 pm

It's a crude tool but there has been some correlation with median transaction value and sell-offs. It was relatively stable last year despite the big increase, until early December (one theory is that everybody's nerdy nephew spread the bitcoin gospel at Thanksgiving). It seems the whales start dumping when it looks like a peak or price stabilization (higher median transaction value) and then smaller players rush in to "buy the dip." Whales aren't buying the dip.

But since this most recent sell-off, the median transaction has been staying a little lower, which maybe suggests smaller buyers are both coming in and being forced out. Certainly unscientific but the chatter on twitter and message boards seems to bear this out--of course, whales don't share what they're doing but plenty of acolytes are happy to brag or complain. Maybe if you can guess where the whales are going to dump again after the minnows bid it up, you can get out then, but the recent pattern has been "smaller buyers equals a price increase." Unfortunately it's just guessing, though.

http://bitinfocharts.com/comparison/bit ... ue.html#3m

I only bought $100 worth to learn about it, and I don't mind holding it a year. I wanted to have a story to tell in 20 years when the grandkids asked whatever happened to the bitcoin craze. I also learned I am terrible at this if I ever wanted to do it for real.
I'm not smart enough to know, and I can't afford to guess.

User avatar
Lauretta
Posts: 670
Joined: Wed Jul 05, 2017 6:27 am

Re: Exit strategy for bitcoin

Post by Lauretta » Thu Jan 18, 2018 4:50 pm

ryman554 wrote:
Thu Jan 18, 2018 3:04 pm

Because things grow, and it's impossible to predict where the growth will occur, please buy everything. Dont pick and choose, don't try to time it, don't get cute. Just buy everything and focus on improving your life elsewhere.

If you want to gamble on bitcoin, go for it. But don't then come asking about exit or trading strategies. Because the original strategy of buying was flawed to begin with.
I'm confused: you say I should buy everything, and then that the strategy of buying bitcoin was flawed. Doesn't 'everything' include bitcoin? :confused
When everyone is thinking the same, no one is thinking at all

User avatar
Lauretta
Posts: 670
Joined: Wed Jul 05, 2017 6:27 am

Re: Exit strategy for bitcoin

Post by Lauretta » Thu Jan 18, 2018 4:51 pm

harvestbook wrote:
Thu Jan 18, 2018 3:09 pm
It's a crude tool but there has been some correlation with median transaction value and sell-offs. It was relatively stable last year despite the big increase, until early December (one theory is that everybody's nerdy nephew spread the bitcoin gospel at Thanksgiving). It seems the whales start dumping when it looks like a peak or price stabilization (higher median transaction value) and then smaller players rush in to "buy the dip." Whales aren't buying the dip.

But since this most recent sell-off, the median transaction has been staying a little lower, which maybe suggests smaller buyers are both coming in and being forced out. Certainly unscientific but the chatter on twitter and message boards seems to bear this out--of course, whales don't share what they're doing but plenty of acolytes are happy to brag or complain. Maybe if you can guess where the whales are going to dump again after the minnows bid it up, you can get out then, but the recent pattern has been "smaller buyers equals a price increase." Unfortunately it's just guessing, though.

http://bitinfocharts.com/comparison/bit ... ue.html#3m

I only bought $100 worth to learn about it, and I don't mind holding it a year. I wanted to have a story to tell in 20 years when the grandkids asked whatever happened to the bitcoin craze. I also learned I am terrible at this if I ever wanted to do it for real.
thank for the fedback: this is quite interesting :happy
When everyone is thinking the same, no one is thinking at all

User avatar
Lauretta
Posts: 670
Joined: Wed Jul 05, 2017 6:27 am

Re: Exit strategy for bitcoin

Post by Lauretta » Thu Jan 18, 2018 4:52 pm

gotester2000 wrote:
Thu Jan 18, 2018 12:59 pm
Simple bitcoin speculation strategy -
1. Buy at price A - do not catch a falling knife unless trend reversal is confirmed.
2. Put a stop loss at B%.
3. Sell X% of bitcoin for every Y% increase in its value.

Nobody knows how much bitcoin will gain or fall but I see no harm in putting 1% of your corpus in it. If you have a strategy you can make serious money with limited downside - though it is not a typical boglehead way.
thanks. but the platform I use doesn't have stop losses (only market and limit orders) :(
When everyone is thinking the same, no one is thinking at all

ryman554
Posts: 1058
Joined: Sun Jan 12, 2014 9:44 pm

Re: Exit strategy for bitcoin

Post by ryman554 » Thu Jan 18, 2018 9:37 pm

Lauretta wrote:
Thu Jan 18, 2018 4:50 pm
ryman554 wrote:
Thu Jan 18, 2018 3:04 pm

Because things grow, and it's impossible to predict where the growth will occur, please buy everything. Dont pick and choose, don't try to time it, don't get cute. Just buy everything and focus on improving your life elsewhere.

If you want to gamble on bitcoin, go for it. But don't then come asking about exit or trading strategies. Because the original strategy of buying was flawed to begin with.
I'm confused: you say I should buy everything, and then that the strategy of buying bitcoin was flawed. Doesn't 'everything' include bitcoin? :confused
No, it does not.

Bitcoin is a single instance of the universe of cryptocurrency. You made a choice to pick one. Picking one is bad.

The total stock market is the sum average of all stocks in the world.

One stock is risky. All of them aren't.

If you classify bitcoin as "currency", it would be similar to buying "the euro". You wouldn't do that, would you? You would buy the entire FOREX market, which would return you a negative value. Not a good choice.

Why not invest in beanie babies while you are at it? Well, what is their innate value? They are cute? Perhaps, but you are investing in a fad. What is the innate value of cryptocurrency? Anybody? Perhaps that is a fad, too. Investing in companies means you own the company. Investing in bonds means you own part of a debt people pay interest on.

Bogleheads are about diversifying risk by investing in a broad class items within an asset. You *could* invest in a cryptocurrency ETF, if such things existed. That would be like buying everything. But, again, why do that when you could invest in the entire forex market. That;s more like buying everything, but it also expected to lose. So don't do it.

Don't listen to CNBC/market news. Don't invest in what's hyped. be boring, be safe, and amazingly, win.

Chadnudj
Posts: 723
Joined: Tue Oct 29, 2013 11:22 am

Re: Exit strategy for bitcoin

Post by Chadnudj » Thu Jan 18, 2018 9:43 pm

Lauretta wrote:
Thu Jan 18, 2018 12:06 am
It was just a gamble with play money; of course I have no idea what it's worth....It's no big deal if I lose that money
Then if I were you, I'd let it ride. If it goes down to nothing, it's an expensive gamble that you lost and a good learning opportunity.

But if it spikes down the line? You can sell. But it doesn't hurt you to hold it for awhile to see how this all shakes out. (And by "awhile" I'm talking 1 year at minimum, but probably more like 5.....there is a chance Bitcoin succeeds to be worth much more than $20k per bitcoin....a slim chance, but one that exists nonetheless.)

rudeboy
Posts: 98
Joined: Thu Oct 05, 2017 9:21 pm

Re: Exit strategy for bitcoin

Post by rudeboy » Fri Jan 19, 2018 12:35 am

Lauretta wrote:
Thu Jan 18, 2018 12:06 am
It was just a gamble with play money...
If I were in your shoes, I'd cash out immediately, and with whatever was left I'd round up some buddies and rent a boat for the day...preferably one with windsurfing capabilities. Now that sounds like a good use of play money. :D

User avatar
Lauretta
Posts: 670
Joined: Wed Jul 05, 2017 6:27 am

Re: Exit strategy for bitcoin

Post by Lauretta » Fri Jan 19, 2018 1:16 am

rudeboy wrote:
Fri Jan 19, 2018 12:35 am
Lauretta wrote:
Thu Jan 18, 2018 12:06 am
It was just a gamble with play money...
If I were in your shoes, I'd cash out immediately, and with whatever was left I'd round up some buddies and rent a boat for the day...preferably one with windsurfing capabilities. Now that sounds like a good use of play money. :D
good idea but I can use my brother's boat for free :D anyway I do see your point :happy
When everyone is thinking the same, no one is thinking at all

mwm158
Posts: 475
Joined: Sat Jun 25, 2011 6:55 pm

Re: Exit strategy for bitcoin

Post by mwm158 » Fri Jan 19, 2018 1:33 am

.....
Last edited by mwm158 on Sat Jan 20, 2018 3:43 pm, edited 1 time in total.

User avatar
Lauretta
Posts: 670
Joined: Wed Jul 05, 2017 6:27 am

Re: Exit strategy for bitcoin

Post by Lauretta » Fri Jan 19, 2018 5:06 am

mwm158 wrote:
Fri Jan 19, 2018 1:33 am
I wonder if there will be collectable bitcoins? Since all transactions are remembered for all time, maybe the bitcoin you bought was used to pay someone for a murder or to help fund nuclear weapons in North Korea? Will those end up being worth more?
Yes I heard that argument. But perhaps my bitoins were used instead by someone amongst the many millions of people in developing countries who do not have access to banking, and for whom the existence of bitcoin seems to be a good thing. I don't know much about these questions but I know that the ethical argument can be made either way.
When everyone is thinking the same, no one is thinking at all

Valuethinker
Posts: 35301
Joined: Fri May 11, 2007 11:07 am

Re: Exit strategy for bitcoin

Post by Valuethinker » Fri Jan 19, 2018 5:23 am

Lauretta wrote:
Fri Jan 19, 2018 5:06 am
mwm158 wrote:
Fri Jan 19, 2018 1:33 am
I wonder if there will be collectable bitcoins? Since all transactions are remembered for all time, maybe the bitcoin you bought was used to pay someone for a murder or to help fund nuclear weapons in North Korea? Will those end up being worth more?
Yes I heard that argument. But perhaps my bitoins were used instead by someone amongst the many millions of people in developing countries who do not have access to banking, and for whom the existence of bitcoin seems to be a good thing. I don't know much about these questions but I know that the ethical argument can be made either way.
Honestly, don't kid yourself. One cannot spend bitcoin on anything useful-- food, utilities, transport, medical care etc. And those sorts of people don't have the tech to make use of it right now.

Ransomeware if we are not lucky. People playing around, if we are lucky. Remember the Green and the Blue chariot races of 6th century Byzantium? that led to what were effectively civil wars? (football violence in the 1970s also comes to mind https://en.wikipedia.org/wiki/Heysel_Stadium_disaster )

Whatever you do, don't kid yourself that this has a useful social purpose. It may, some day, but it is not fit-for-purpose that way.

As Bill Gates said when he first visited an African village (paraphrasing) "I realized that not having internet connection was not the worst problem these people faced".

An abiding problem with Silicon Valley is that it thinks what it does can always be socially justified, and thus that the ordinary rules of society don't apply to it. Thus, the whole science of making aps more addictive.

Valuethinker
Posts: 35301
Joined: Fri May 11, 2007 11:07 am

Re: Exit strategy for bitcoin

Post by Valuethinker » Fri Jan 19, 2018 5:36 am

Lauretta

BTW if you are still holding Bitcoin there is a case for still holding on.

I held Nortel (down from $125, bought at $25) all the way down to 1 cent. This was, at one point, the largest telecommunications equipment company in the world-- and capitalized at something like 1/4 of the whole Canadian stock market.

Including the lost opportunity to invest in index funds, roughly speaking the money I lost on Nortel would now be worth c. $15,000. When I retire, perhaps $30k. When I die, perhaps $120k (assuming I never sell, markets have historic returns, etc.).

https://www.amazon.co.uk/Mathematician- ... the+market

has a similar story about Worldcom.

So these things are quite educational, in their own way.

User avatar
Lauretta
Posts: 670
Joined: Wed Jul 05, 2017 6:27 am

Re: Exit strategy for bitcoin

Post by Lauretta » Fri Jan 19, 2018 6:04 am

Valuethinker wrote:
Fri Jan 19, 2018 5:36 am
Lauretta

BTW if you are still holding Bitcoin there is a case for still holding on.

I held Nortel (down from $125, bought at $25) all the way down to 1 cent. This was, at one point, the largest telecommunications equipment company in the world-- and capitalized at something like 1/4 of the whole Canadian stock market.

Including the lost opportunity to invest in index funds, roughly speaking the money I lost on Nortel would now be worth c. $15,000. When I retire, perhaps $30k. When I die, perhaps $120k (assuming I never sell, markets have historic returns, etc.).

https://www.amazon.co.uk/Mathematician- ... the+market

has a similar story about Worldcom.

So these things are quite educational, in their own way.
Yes it's a good idea to treat is as an educational experience - last year I learnt from a mistake I made in buying parts of an active fund (because it had beaten all the others in the previous years - but then it started losing money the day after I bought it, and since it had very concentrated positions, it lost quite a lot :annoyed ) to use only index funds only... this 'experiment' with bitcoin (I use the word experiment, which Josh Brown used - and he seems to know a lot about the markets so I thought if he does it why shouldn't I try?) will teach me about cryptocurrencies...
When everyone is thinking the same, no one is thinking at all

User avatar
Lauretta
Posts: 670
Joined: Wed Jul 05, 2017 6:27 am

Re: Exit strategy for bitcoin

Post by Lauretta » Fri Jan 19, 2018 6:15 am

Valuethinker wrote:
Fri Jan 19, 2018 5:23 am
Lauretta wrote:
Fri Jan 19, 2018 5:06 am
mwm158 wrote:
Fri Jan 19, 2018 1:33 am
I wonder if there will be collectable bitcoins? Since all transactions are remembered for all time, maybe the bitcoin you bought was used to pay someone for a murder or to help fund nuclear weapons in North Korea? Will those end up being worth more?
Yes I heard that argument. But perhaps my bitoins were used instead by someone amongst the many millions of people in developing countries who do not have access to banking, and for whom the existence of bitcoin seems to be a good thing. I don't know much about these questions but I know that the ethical argument can be made either way.
Honestly, don't kid yourself. One cannot spend bitcoin on anything useful-- food, utilities, transport, medical care etc. And those sorts of people don't have the tech to make use of it right now.

Ransomeware if we are not lucky. People playing around, if we are lucky. Remember the Green and the Blue chariot races of 6th century Byzantium? that led to what were effectively civil wars? (football violence in the 1970s also comes to mind https://en.wikipedia.org/wiki/Heysel_Stadium_disaster )

Whatever you do, don't kid yourself that this has a useful social purpose. It may, some day, but it is not fit-for-purpose that way.

As Bill Gates said when he first visited an African village (paraphrasing) "I realized that not having internet connection was not the worst problem these people faced".

An abiding problem with Silicon Valley is that it thinks what it does can always be socially justified, and thus that the ordinary rules of society don't apply to it. Thus, the whole science of making aps more addictive.
thanks for the input; bitcoin supporters seem to be convinced of its important social purpose and speak of a peaceful revolution. I see your point though; I will investigare this further.
I don't know much about football violence but I read an interesting book on it a few years ago, called Among the thugs: https://en.wikipedia.org/wiki/Among_the_Thugs
On this subject, do you mean that because the ideas on bitcoin are so polarised (supporters are crazy about it, whilst many other people think it's a scam) this could result in violence and social unrest?
When everyone is thinking the same, no one is thinking at all

mws13
Posts: 55
Joined: Wed Mar 25, 2015 2:14 pm

Re: Exit strategy for bitcoin

Post by mws13 » Fri Jan 19, 2018 6:37 am

This was posted on another thread but after 5 years of being in Crypto, Steven Johnson laid out the possibilities and the problems as well as I have seen anywhere. It is a "weekend read", meaning it is long and complicated:

https://www.nytimes.com/2018/01/16/maga ... d=tw-share

Post Reply