FAQ: Is it time to sell my Bitcoin?

Considering?” Absolutely. Depending on the size of your holding, your other assets, your time horizon and your risk tolerance it is likely that a gradual reduction in the asset over time is prudent.

Analytical guidance is unfortunately mired in mathematics: Merton’s portfolio problem on Wikipedia provides (IMHO) the most direct and easily explained guide for the action. It is also alleged to be mathematically an exact solution to the control problem of maximizing wealth.

Read the wiki entry for what the symbols mean. Here is an interpretation based on my reading: The fraction of your wealth that should be held in Bitcoin (in this particular case) should be a constant fraction based on the annual return from that holding in excess of the risk free rate divided by the volatility of Bitcoin squared times your personal risk tolerance.

None of these parameters are readily found. My guess would be that the ratio of annualized net return divided by the square of volatility is a small fraction, approaching zero if not a negative factor. “The risk tolerance gamma is a constant which expresses the investor’s risk aversion: the higher the gamma, the more reluctance to own stocks.” All of which can be summed as: Keep the fraction of your wealth in Bitcoin constant and small. If it goes up, sell so the fraction remains constant. If Bitcoin goes down and so does your fraction in the asset and if you are a dedicated speculator and if the signs are right; buy more.

Are you as excited about the Crypto Market as us? Feel free to check out: CoinCheckup.com – The Crypto Analysis, Price predictions & Investment Stats.

Disclaimer: Coincheckup.com delivers by no means Investment advice. Questions and answers are sourced from the website and don’t necessarily have to represent the vision of CoinCheckup. Statements and financial information should not be construed as an endorsement or recommendation to buy, sell or hold. Please do your own research on all of your investments carefully.