The price of bitcoin and other cryptocurrencies have been soaring upwards at a bottleneck pace and this has led me to have many different feelings on the situation. Naturally my first emotion is pure ecstatic joy; by investing heavily into this industry I have made life-changing gains and my life's future has completely changed. Not only financially, but also my mindset as well.
But, shortly after feeling that pure joy emotion, a sadness rushes over me as well. I have recently come to grip with the fact that the easy days for accumulating bitcoin and ethereum are now behind us. Yes, I do think there will still be amazing gain opportunities. But the days for the average person to accumulate several of those two coins in their portfolio are quickly fading away. Now, it will it will be a game of buying small percentages of a coin, and working hard to hopefully someday build up your stack to a full coin, rather than spot buying a full coin. I have talked about this fact in some of my previous articles, and how this has forced me to shift my strategy on how to continue accumulating at a pace that satisfies me.
If you have been in the cryptocurrency market at least a year or more, and have held onto your coins without selling; then there is a very good chance that you're deep into profits right now. Imagining where the price might go by the end of the year, or even next year brings up some pretty crazy scenarios of what I could do with my potential profits.
But, the great thing is that everyone is different, and their needs are different as well. Their bitcoin profits could be used or put towards an endless possibility of options. Always remember that what is a small amount of money for you, could actually be a life changing amount for the next person.
So what are you planning on using your profits for?
1) Paying Off Debts
Having a large amount of debt is a burden I wouldn't want to wish on anyone. Once you become deep enough in debt, it is likely that you will never be able to escape from it. Part of it comes from just a lack of income, bad luck (health), or mindset (can't control spending.) Whatever your reason is, once you're in debt it changes your life for the worse. Just imaging not having that credit card payment, or the house payment, car payment, student loan payments. If you didn't have any of these to pay you would most likely be able to save much as fast and more. Not only that, but you would have less stress and enjoy life more. Possibly going on that dream trip of yours. Or maybe you wouldn't have to work quite as hard and spend more time with your family.
While for some people; using their bitcoin profits to finally completely pay off their debt might sound like a boring, or adult thing to do. But in fact it would be the best thing for you to do that would have the most positive impact on their life if you can remain debt-free. Personally I have quite a bit of student loan debt and am enjoying the current interest free period to bring down that amount faster than usual. While I don't plan to use my bitcoin or ethereum in the near future to pay off my loan debt, because I am certain the prices will go up much future. But after 5 years I would probably sell off a few ethereum to finally clear my loan debt.
2) Impulse Purchases
I must admit that I hope this is the situation that I hope most people avoid. Using their gains for a quick impulse purchase that they don't necessarily need. Perhaps this would be buying something quite expensive like a computer, iPhone, Tesla or different car, name brand clothing/jewelery, or something else. It always hurts to see someone sell off one of the strongest appreciating assets we have ever seen, for a depreciating one. But, at the same time, if you have made incredible gains, it's okay to rewards yourself with something special. But I wouldn't recommend it if it equals to be all of your gains. Personally I'm not taking my foot off the pedal in my accumulating even while the price has been almost constantly going up to new all-time highs.
3) Selling For Cash and Piece of Mind
This option consists of just selling off their cryptocurrency and putting that cash in the bank and letting it sit. For many, the price going up can actually be a very stressful experience. Of course they are excited about their coins' value going up, but they are very worried about the price dumping and losing out on their savings. Often this will be people newer to the market, or don't really know the thesis behind bitcoin and where things are going. There's a good chance that these people might also be newer to investing in general.
I think it's a very smart decision to take some profits while the value of your portfolio is increasing. After all, you haven't actually made a profit until you sell it. A good idea would to maybe just sell your initial investment, and then let the remaining ride; just in case things keep going up. This way you are guaranteed to not lose money.
It's always a good idea to have an emergency fund, or money to pay for important things in life; such as your children's wedding and so on. But if the money is only sitting in the bank, please remember that the real value is dropping each year due to inflation and bitcoin is currently on the greatest run we've ever seen. I for one would rather regret holding on too long and losing out on some profit, rather then selling too early and have "what if?" regrets for the rest of my life.
4) Retirement Portfolio Cornerstone
In this step you actually don't need to sell your bitcoin or crypto; it is more of a long-term play. You think that the value will go up, and while you don't have enough to retire, the amount of bitcoin you have will really help make retiring more of a possibility. This would actually be my current bitcoin stage myself. People in this category probably understand very well the value that bitcoin holds, and they want to maximize it. They might even lend out their bitcoin to services like BlockFi and Celsius to maximize accumulating even future. They are a HODLer in the true sense.
5) A New House
This is the category that I am really struggling with at the moment. In this category, you have quite a significant cryptocurrency portfolio, and it is large enough that you could buy your dream house in full with your bitcoin. There is a famous thought that during a bull run, a bitcoiner's most popular app other than checking the price is Zillow. It become quite exciting dreaming about which house you can afford to buy, and if the price of BTC would go just a bit further how much of an upgrade you could do.
What could be better than living in an amazing place and being able to share it with your family?
But then I think to myself that bitcoin is still very young. If I just wait 5-10 more years I could buy an even more impressive house; while having to use even less BTC to pay. I can't fault anyone who does decide to sell for a house, but right now I am trying to hold on strong.
6) Quit Your Job and Retire
This is also a very tempting option. For many people having the opportunity to quit their job, and live the easy life is what they've always dreamed of. This is the very reason why I invest and why I got into bitcoin too. I definitely can't blame anyone who has accumulated enough cryptocurrency and decides to sell. In fact, I would be quite envious.
But bitcoin and cryptocurrency has become my biggest passion; I can't imagine doing anything else. If I were to sell off my holdings completely, what would I do? It would probably be too painful for me to pay attention to the markets. It just wouldn't be as interesting if I wasn't invested in the game. And then if the price would skyrocket even further I would regret it forever. But, if the price would dump I would be very thankful as well.
I for one wouldn't retire until I have a real plan for what I would want to do during retirement. Of course I would take it easy for a while, but after not so long that might become boring. I would probably try to start my own business, or get even deeper into investing in some way or another.
7) Never
Naturally this is the category for the people that will never, ever sell. They love the technology and what it could do for the world. They are a fan of who cryptocurrency could equalize the world. And they have strong conviction for where the price will be going. Once bitcoin gets to a certain price level; it will no longer need to be sold. They realize that they have the most sought after asset in recent memory. If they were to sell; not only would they have to pay high taxes on the capital gains, but they might regret it for the rest of their lives. They would much rather use their BTC as collateral and take a loan against that if they need money.
It could at that point become the next world reserve currency. If that comes to fruition you could buy anything and everything with bitcoin. Just like you can with US dollars or the currency where you reside.
I must confess that I do see a little of myself in each of these categories. I do hope to eventually reach both #6 Quit your job and retire, and also #7 never. With lending services, and staking it would actually be very possible to achieve both in the future if your portfolio is large enough.
How about you!? Which type of bitcoin seller are you? And why type do you hope to become in the future?
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