What is Your Hodling Timeline?
Today, I wanted to break from my standard philosophy/psychology topics and discuss crypto investing strategies
The other night, I was talking with someone about my renewed writing output, fueled in large part by Steemit. As a part of this conversation, I discussed how a person is able to monetize their content through the Steem blockchain, which led to a larger discussion about cryptocurrency in general.
This person eventually asked me when I intended to sell my holdings as a way to get out of the space and into something more tangible. I chuckled, though it reminded me of the critical issue at hand: when do you cash out, if ever?
Some individuals have the luxury of earning enough money through their career, investments, or other various streams of income to not even need to consider withdrawing/selling their crypto. But for many minnows, this issue is an interesting conundrum. It's easy to say that once my hodlings hit X, I'll sell, yet I'm sure plenty of early Bitcoin adopters are wishing they had a different strategy.
What do you intend to do with your hodlings?
Sure, everyone is dreaming of the lambo moon shot of our favorite project. Having enough funds to never have to really worry about money again would be the ideal outcome, but that probably won't happen for most hodlers, barring an absolutely insane parabolic event.
Personally, I'd love to have my holdings reach a point where I'm able to purchase land and build something on it. The idea of skipping the mortgage game and forgoing giving my money to the banks is certainly appealing, as is the idea of paying for my home while avoiding a massive debt load.
Having a few structures on my property to rent out to other travelers would be pretty swell as well, turning my digital assets into tangible streams of income. I live in Colorado, where real estate is pretty nuts. In order to feasibly pull this off, I'd probably need in the neighborhood of 500k. I'd need a pretty big moon shot for both Smart and Steem, two of my biggest holdings, in order to make this feasible.
Balancing the ideal with the practical
During the last market peak, my hodlings were looking great, and the urge to cash out was present even if I was far from my long-term financial needs. I decided to hodl, a decision I don't regret despite the market downturn.
It's practically impossible to time the market perfectly. There have been a few instances where I bought into something immediately prior to a boom or sold right before a drop-off, but I'm certainly not a professional trader. The next time the market goes parabolic, specifically with my primary holdings, it may be difficult to not take some profits and that might be the smart move.
As a SmartCash Smartnode operator, I'm certainly going to hold on to a lot of my Smart for a long time, as I believe in the project and love receiving passive income through both node payouts and SmartRewards' payments. As someone who believes in Steemit and enjoys earning more crypto through posting, I doubt I'll sell most of my Steem any time soon either.
But who knows, if things get really nuts I might have to reconsider. What is your hodling timeline?
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Hi Colin,
My hodling timeline on Steemit is 5 years before taking out any financial gain.
Here's why: Steemfest 1 was in Amsterdam in 2016, and I flew over for the weekend to learn what Steemit was all about.
Decided to try my hand at blogging.
Thought that being a writer/travel/health/fashion/humor blogger might be a fun business if I enjoyed doing it.
A year and a half later, Steemit is still around, over 1500 people elected to follow me, telling me that over a thousand people wanted to read more, and my posts are averaging $2-$3 each.
In 2021, this business becomes a hobby, according to IRS rules if I don't show any income from it, so I'm obligated to make this work in that time frame as a legitimate business source.
I could game the system and max upvote 10 posts per day of crap, but that's the trending page: full of others doing exactly that, only for financial gain, which will torpedo the platform if everyone did the same.
As Gandhi says:
"Be the Change that you want to see in the world."
So contributing quality content, for the sake of the long-term benefit of myself and Steemit (as you also contribute!) is the goal.
I also have bitcoin exposure, and I doubt I'll ever sell that. Legacy gifts to my heirs, I reckon 😉
Interesting, I didn't know that regarding IRS rules. I only sell SBD for fiat, as I could use the cash currently. I hold almost all of my Steem as SP, though I did power down 1 week's worth to have some liquidity in the event that Steem goes parabolic at some point and I want to take some profits.
It's great to not game the system too much and to support the overall platform as a whole by not adding to the bullshit that's going on. I discontinued delegating to bidbots for this reason, despite the solid ROI.
My understanding via my accountant is: If you start a business with good faith and invest money, you can write those expenses off of your normal income. If your business expenses are greater than your business income after 5 years, the IRS determines your business is actually a hobby, and you'll get hit for back taxes on all of those write-offs you benefitted from over the past 5 years.
Don't take any of my words as complete or even true; I'm parroting what I think I heard from accounting professionals.
Crypto is a new game in the economic realm, my accountant and I are doing everything we can to demonstrate full faith and transparency in this paradigm shift the world is slowly waking up to.
'Cause I think going to prison would be hella lame. 😇
i only buy and hodl passive earning crypto curriencies like NEO, STEEM and KUCOIN. i have a long term plan of about 3 years before selling @colinhoward
Thanks for that. I've definitely considered buying NEO for that reason, and I love coins that give you extra coins for holding it :)
I never heard of smart until I read about it from you. Look I read about a new hot coin on heat every week. No matter which way you look at it some of these hodlers are getting burned in the end.
Not every coin will hold up over time, you're right about that. Good to diversify for that reason.
My #1 goal at this time is to pay off my mortgage. If my hodlings reach that point then I would look into selling.
Eliminating debt and true homeownership is the quickest path to early retirement in my opinion.
That's a great strategy. Though it can be tempting to wait for even bigger gains, cashing out to pay off a house is a damn good reason to sell.
Interesting thoughts on withdrawing investment earning vs developing a passive income through SmartCash and Steemit. This is the tradeoff that everyone who invests faces.
Definitely, it's a tight balance to find sometimes. If a project goes belly up and is worthless at some point, we'll look back and wish we sold at the peak, but that's all part of the gamble of the crypto space. Can't have 100x return possibilities without the chance of also losing everything.
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Buy and hold until a projected profit % is hit. Time isn't a good reason to hold unless its your core holding such as BTC, ETH etc.
@colinhoward, great analysis. After seeing the yoyo price changes last year my strategy is to sell when is peaks and buy back again when it goes down, this way you increase the number of coins you hold and actually benefit from all moves. If you start out with 100 coins you can easily increase it to 500, so even if your coins don't "moon" you have coins to sell to meet any needs without exiting completing positions you have had for a while