I'm in the business of stacking sats. I think most of us are in the same business. We all believe in crypto long-term and Bitcoin is our gold-standard. To me, holding a large stack of BTC that is ever-growing has always been vital.
Before I hear all the maxis and arguments against Bitcoin... Yes, you can still hold altcoins. Yes, you can still utilize platforms like Hive to earn. No, I don't believe that everything is going to 0 just because I believe in Bitcoin. For some reason, a tribalism has developed where saying you believe in BTC means you hate altcoins.
When one of your primary goals is stacking sats - as mine is - you need to be creative in how you deploy strategies and buy more Bitcoin. Bitcoin can be earned, bought and sold. There are also a lot more things you can do in between those 3 activities.
I've talked extensively about BTC Collateralized Loans and how I - and many others - utilize them to avoid selling Bitcoin. Instead of selling BTC to pay bills and other expenses, you can take a stablecoin loan against your BTC and utilize that to pay your bills.
There are a number of tax and other advantages to doing this. It's really incredible when you start diving into it.
I hold a significant amount of BTC in various lending protocols that allow me to borrow stablecoins against the BTC collateral. The key here is that I get to continuously stack sats, but when I need liquid $$ to pay for something, I can access liquidity without selling the sats.
Down the line, you sell a % of your BTC to pay back the loan. The thing is, the BTC tends to appreciate far faster than the debt accumulates. When a bear market turns to a bull market, a quick 2-4x in Bitcoin is possible. When that happens, paying off the loans you took during the bear market doesn't require you to sell a huge % of your BTC stack.
When the cycle repeats, you go back into bear market mode and accumulate all the BTC that you sold in the previous cycle.
Obviously, this all is a lot easier said than done. Greed and fear are powerful emotions and they can destroy even the best laid strategy. That's why I like to utilize Dollar-Cost Averaging both for entry and exit points.
Buying slowly in the bear market. Methodically and with consistent amounts.
Selling slowly in the bull market. Methodically and with consistent amounts.
BUT, there exists a lot of noise in between bear and bull cycles. We're in that noise right now. Bitcoin isn't at it's ultimate low point (it hit $15k a few months back) but it also isn't necessarily in a bull market. We're smack dab in the middle of it, sitting at $25k.
One interesting thing that happens when you start stacking sats in these collateralized lending vaults is that you start to see the total $$ value of your collateral (BTC) fluctuate up and down wildly.
In the past few days, BTC went up over 30%. Fluctuating like crazy thanks to all the SVB, FED and other news cycles.
Sitting in a big collateralized vault means that I'm often watching my BTC collateral fluctuate by tens of thousands or even hundreds of thousands of dollars. An investor at heart, it's hard to look at these numbers without wondering how I can profit on the volatility.
I don't want to have to dip into my vaults to withdraw Bitcoin, sell it on the spot market and then wait to buy it back later and then deposit it back into my vault... that sounds like a ton of work and a ton of fees, right?
Enter, short-selling.
How to Sell Your BTC Without Selling Your BTC
Short-selling is a great way to hedge your long positions. That's primarily how I use it. A lot of people out there will short assets they don't hold in a long position simply because they don't like the asset or believe a short-term downtrend is coming.
For me, I like to use Shorting as a way to hedge my long positions. I hold a metric shit ton of BTC but I still believe that it's going to appreciate over long timeframes.
In most cases, I'm unwilling to move and sell sats... but when the market goes up 30%, I begin to wonder how I can captialize on some short-term volatility... Since I remain quite confident that we will see a little reversal - even if short-lived - following a move like that.
Instead of moving the BTC Out of a Collateralized Lending Vault and paying huge fees and most importantly; wasting a bunch of time - I can utilize shorting to "sell" the BTC I actually hold without moving the real coins.
It's like borrowing someone else's BTC and selling it. Then buying it back later when you want to close the position. Meanwhile, you have the BTC to cover that position if it goes far against you.
Recent Moves
So the market moved like crazy and I decided I wanted to hedge against a short-term downfall in prices. I decided to hedge by short-selling a tiny % of BTC (relative to the real BTC I hodl).
There are all sorts of platforms to do this on. You can discover which ones are best for you - dependent on various regulatory rules, KYC rules and decentralized access. I tend to prefer decentralized platforms and there are dozens of ways to access all of the above. That's for you to research on your own!
Let's say that you own a lot of Bitcoin and on this recent move, you want to sell just a small % of it. Let's say it's roughly 0.20 BTC.
Rather than going through all the motions and paying potentially $100 in fees, you short-sell on a platform. You put up $800 in margin collateral and then you can easily short-sell the 0.20 BTC.
This gives you a liquidation price of $29.5k. Be very mindful of this. If you're uncomfortable with that liquidation price, add more USDT collateral to increase it.
But my comfort level is high. This is a short-term hedge and I am not planning to keep it on long. This is meant to serve as a replacement for:
- Removing 0.20 BTC from a vault
- Sending it to an exchange
- Selling it for USDT
- Waiting for BTC to drop to $22k (or whatever re-entry price I want)
- Buying back the 0.20 BTC for less USDT than I sold it for
Instead of all those steps, I just send 800 spare USDT to an exchange, short the BTC in the futures markets and then wait to cover the trade until BTC hits my "re-entry" price.
Strategies
IMO we are in middle-market times. We're not in a bear market. We're not in a bull market. We've bottomed out (Again, just my opinion) but we are also not ready to take-off to the moon quite just yet.
This requires some nuance to our strategies. BTC is still low relative to where I expect it to be in the next 2-5 years. This means that I am in the business of stacking sats.
At the same time, I am looking for ways to capitalize on all the BTC that I hold as collateral.
One way that I've discussed is taking loans against that BTC to pay bills now, then using the appreciation of BTC in the future to pay those loans off.
The second way that I've discussed now in this post is shorting BTC to hedge my total stack and potentially capitalize on some volatility in the near-term.
Key word: potentially.
I don't know if this market is going up, down or sideways. You don't know that either. No amount of analysis will tell you what happens tomorrow... If it did, you'd already be a billionaire.
Knowing our limitations allows us to carve out a little niche of strategies that can work in our favor. Be mindful, do research. You know the drill.
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