If not having money in crypto, then in what?

OKboomer

New Member
So my friend got into crypto pretty early on and has now amassed a pretty penny.

The wisdom goes "don't keep all your eggs in one basket", but we all know how hard cashing out crypto is.

But an even bigger problem comes to mind. So, you have managed to cash out a 7-digit amount into fiat. What to do with it?

Banks, those few who will tolerate this at all, will pretty much force you to buy stocks or some other shit that, frankly, is in a worse bubble than Bitcoin. We are on the verge of a massive downturn so buying stocks now (mid- or long-term) is IMO stupid. Bonds or some other crap is barely keeping above inflation. Real estate in most countries is taxed to hell and using offshore structures to own property is punished by higher taxes on property. Renting it out (excl Airbnb which is a hassle requiring someone doing it as a part-time job, pretty much like running a small business) gives you a yield of 3-5% of property value, will still get taxed and there is paperwork and time invested into it. Buying property speculatively just to hold and resell later is punished in many civilized countries either with high round trips to buy/sell property or a tax on unused property, which will pretty much eat most of your potential profits. Plus managing property one way or another is still business, which means either yourself or any trusted person of yours needs to manage this.
Gold and some other stuff, sure maybe, but there is much friction (big cuts taken by middleman if you need to buy/sell quickly, risk of getting fake gold, harder to transport across borders than crypto). Buying some crap like gold certificates is even worse, there are more of those certificates around than gold itself.
Holding cash? It's hard. Banks don't want you to have a lot of cash on your account. Many countries now even have negative interest rates , either direct or through big fees, so you are gradually losing the value of your cash (not mentioning inflation, which is WAY higher than 1-2% reported for first world countries. The statisticians are lying. Stuff like buying good food and clothes, using good transport and staying at good hotels is growing at 10-20% per year. I don't talk about buying Versace clothes and staying at Four Seasons, but just good quality decent consumer goods (foods that don't give you cancer) and staying in decent holels (where your back is not aching from lying in bed and gym does not have pubic hairs thrown around) is getting A LOT more expensive. Anyway, so cash is also slowly losing its value. Assume you get some cushion worth 5-10% of your crypto wealth in cash just for expenses and for a rainy day, etc. the question remains, what about the rest.
Buying luxury shit is, for most part, waste of money (cars, yachts, watches) or will get taxed to hell and/or will require moving around a lot (villa / maximum number of days residence allowed in the jurisdiction of villa). Also, keeping value for these is questionable, whereas maintenance (villa, yacht) is also sizeable every year.
With all this in mind, my friend has decided to stay in crypto for now, apart from having a few small chunks in cash/gold just in case something bad happens. Seems there are no better options for the rest.

So the question really remains, if not having money in crypto, then in what?
Let's have a discussion on this. Especially any other users who are deep in crypto, would be good to know if I am the only one thinking like this.
 
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moneyhoney

Building Trust
Entrepreneur
I have no answers but just questions about this topic and I'll follow it.

For instance: Cryptos are good for a series of reasons, but... are you talking about stable coins? (in this case, still problems with inflation and stuff) or bitcoin? in this case, how to manage the fluctuations? Yes, it can go to the moon, but can even go to 0 or close to it, it all depends on the approach of big countries IMHO: what if the USA starts being more strict (like China these days) or apply some kind of ban to it? The price would collapse. The tool would be still great and good, but it wouldn't have the value of these days. Or more likely Europe will do it. Again, in my opinion, you just need a big incident and the govs will try to have much more control over it (something related to terrorism for instance) and the price would follow.
 

GiGoGo

Building Trust
Entrepreneur
Mentor Group
Short Bitcoin with your Bitcoin without leverage. If Bitcoin price goes down, you'll still have the same value in USD.

I use that for some customers that doesn't want to use Stablecoins.
 
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moneyhoney

Building Trust
Entrepreneur
Short Bitcoin with your Bitcoin without leverage. If Bitcoins goes down, you'll still have the same value in USD.

I use that that for some customers that doesn't want to use Stablecoins.
You are right and I'd need advice about it.
 

Martin Everson

HNWI Offshore Consultant
Business Angel
Mentor Group
But an even bigger problem comes to mind. So, you have managed to cash out a 7-digit amount into fiat. What to do with it?
Late in the day to cash out of crypto. I cashed out my crypto end of 2017 when BTC was at $13k. I was right to get out then as I saw everything coming as I wrote below in Mar 2018.


So the question really remains, if not having money in crypto, then in what?
Nothing

Pretty much everything you said is correct. There is no magic answer btw. Timing is everything. I am 100% in AAA EU 30y sovereign bonds at circa 4% yield which is good enough for me as I got in very early.

You look at Warren Buffet he has a large percentage of the funds of Berkshire Hathaway in cash i.e US treasuries to tune of $128bn. He is also looking where to put cash but there is nothing out there that is "value for money" or "safer than cash like instruments" right now.
 

blackeric

Active Member
Short Bitcoin with your Bitcoin without leverage. If Bitcoin price goes down, you'll still have the same value in USD.

I use that for some customers that doesn't want to use Stablecoins.
I don't understand a word. What's "short bitcoin"? What's "short bitcoin with bitcoin"?
"If Bitcoin price goes down, you'll still have the same value in USD." --> why?

"I use that for some customers that doesn't want to use Stablecoins." --> what do you mean?
 

mange38

Building Trust
Entrepreneur
I don't understand a word. What's "short bitcoin"? What's "short bitcoin with bitcoin"?
"If Bitcoin price goes down, you'll still have the same value in USD." --> why?

"I use that for some customers that doesn't want to use Stablecoins." --> what do you mean?
.
 

Elve

Building Trust
Entrepreneur
It is a good technique to have Bitcoin without being subject to the volatility of the BTC price, but the problem, to which broker have long-term confidence to take short positions? Kraken or?
 

GiGoGo

Building Trust
Entrepreneur
Mentor Group
BitMEX has perpetual future contracts, can last months until a scheduled maintenance shutdown
 

OKboomer

New Member
I have no answers but just questions about this topic and I'll follow it.

For instance: Cryptos are good for a series of reasons, but... are you talking about stable coins? (in this case, still problems with inflation and stuff) or bitcoin? in this case, how to manage the fluctuations? Yes, it can go to the moon, but can even go to 0 or close to it, it all depends on the approach of big countries IMHO: what if the USA starts being more strict (like China these days) or apply some kind of ban to it? The price would collapse. The tool would be still great and good, but it wouldn't have the value of these days. Or more likely Europe will do it. Again, in my opinion, you just need a big incident and the govs will try to have much more control over it (something related to terrorism for instance) and the price would follow.
This is debatable, but overall your arguments are valid in my opinion. Bitcoin's weakness is that it's a social construct and thus indeed can suffer fall in value in case of adverse actions. On the other hand, I do believe that in case any major countries become too strict/punitive towards it, some other countries will try to become more pro-Bitcoin. Cryptos that bring utility, such as Ethereum, are in my opinion a more sustainable value proposition, as it has the duality of payment and utility, but lately both Ethereum's own messiness and "killers" competition has raised serious fundamental questions about it. Not to mention thousands of companies who have run ICOs and are dumping at every attempt at upward movement.

On the other hand, that complete control over your assets does feel sweet. Your bank accounts, propertty, stocks, etc. can be frozen at a whim of any regulators, bureaucrats, bankers, tax people , etc under the guise of AML or breaking whatever other rules they come up with.... Crypto is truly yours. Nobody can freeze it or take it away. This is something psychologically very rewarding (although I acknowledge it won't be much consolation, if it falls to 0....)

Short Bitcoin with your Bitcoin without leverage. If Bitcoin price goes down, you'll still have the same value in USD.

I use that for some customers that doesn't want to use Stablecoins.
I don't know any legit exchange that allows it. Either way, and what if its value goes up? It's still taking a short position...

Late in the day to cash out of crypto. I cashed out my crypto end of 2017 when BTC was at $13k. I was right to get out then as I saw everything coming as I wrote below in Mar 2018.




Nothing

Pretty much everything you said is correct. There is no magic answer btw. Timing is everything. I am 100% in AAA EU 30y sovereign bonds at circa 4% yield which is good enough for me as I got in very early.

You look at Warren Buffet he has a large percentage of the funds of Berkshire Hathaway in cash i.e US treasuries to tune of $128bn. He is also looking where to put cash but there is nothing out there that is "value for money" or "safer than cash like instruments" right now.
It depends on how much you got your BTC for. If you got it at $10, cashing out now is also not a bad time for you.
Treasuries are just marginally better than hard cash (the extra few % you are getting), whereas you still have a slightly lower liquidity and also fundamental risks of money being taken away from you under the whim of people mentioned above.

As with any investment you should go with different assets, for instant Gold, Bitcoins, Cash and property all of it together will secure your overall investment.
I discussed the practical hurdles of following this wisdom in my OP.

BitMEX has perpetual future contracts, can last months until a scheduled maintenance shutdown
BitMex is the fastest way to lose all your money.
 

Elve

Building Trust
Entrepreneur
BitMEX has perpetual future contracts, can last months until a scheduled maintenance shutdown
Ok and thanks for the information, I never used bitmex. but thinking well about it, all that manipulation I don't know if it's really any use or it is better to leave your funds in the fiat balance of the same broker (supposedly trustworthy) without so much complication? And in addition to the commissions that the broker takes for these short positions.

The only advantage of that manipulation that I see is that you can leave only part of your BTC in guarantee in the broker and the other part in a personal safe BTC wallet, and adjust the positions depending if the BTC value goes up or down. But is there a crypto exchange reliable enough to maintain a large part of the patrimony? I do not think so.

Keeping funds in stablecoin is not very safe either, we saw the murky things with bitfinex, Tether and the supposed funds entrusted to Crypto Capital Corp Bloomberg - Are you a robot?

It would be great to be able to keep our mayor assets in a decentralized system, but I believe that there is not yet a secure enough solution at this time without being exposed to the volatility of all crypto or the bad management of stablecoins.
 

void

Trusted Member
Business Angel
I think right now there are no good options to invest.
Cash (I mean the physical cash, not bank account balance).
Physical gold (kept outside the registered deposit boxes).
Bitcoin (despite it's unusable as electronic cash at the moment under current circumstances it's a dream investment).
Some very specific and well chosen real estate investments spread around the world.

Nothing else makes sense to me right now. Waiting for the big selloff once it crashes.
 

Martin Everson

HNWI Offshore Consultant
Business Angel
Mentor Group
Nothing else makes sense to me right now. Waiting for the big selloff once it crashes.
Yup I have a lot of patience for this event which may take a long time to play out but will eventually thu&¤#.

Most people can tell something is seriously wrong with the global financial system right now when every major asset is overvalued. Only the wealthy and those that benefit from it don't complain and instead praise it as its the hand that feeds them.
 

GiGoGo

Building Trust
Entrepreneur
Mentor Group
Yup I have a lot of patience for this event which may take a long time to play out but will eventually thu&¤#.

Most people can tell something is seriously wrong with the global financial system right now when every major asset is overvalued. Only the wealthy and those that benefit from it don't complain and instead praise it as its the hand that feeds them.
I think they are artificially pumping it until the Trump reelection, after that... big problem ahead
 

Martin Everson

HNWI Offshore Consultant
Business Angel
Mentor Group
I think they are artificially pumping it until the Trump reelection, after that... big problem ahead
Could be two fold. Trumps wants lower interest rates to keep stock market going up. The US markets are detached from reality and fundamentals and run off Trump tweets and share buy backs. When Trumps says he wants lower interest rates and that a deal with China is close then markets go up. So if no China trade deal and a shock rise in interest rates due to inflationary pressures due to price increases then goodbye US economy :confused:.

P.SI am 100% out of the US economy investment wise but good to watch.
 
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