Sell Bitcoin or Hold? Sobering Economic Model by Investor Fred Krueger

Prominent investor and entrepreneur Fred Krueger, author of The Big Bitcoin Book and enthusiast of Bitcoin (BTC), Solana (SOL) and AI, explains a very interesting pattern of using BTC as a yield-generating asset or finding another “safe haven.” It looks like selling BTC in some situations might be smarter than seeking alternatives.

It’s better to sell your BTC step by step, Fred Krueger says

Between gradually selling BTC for income and investing in the yield-producing asset “on the side,” the first strategy looks more prudent to Bitcoiner Fred Krueger PhD, seasoned investor and entrepreneur with 10 exits. Dr. Krueger shared a 10-year model with his 163,400 followers on X.

To demonstrate the hypothetical pros and cons of the two instruments, Dr. Krueger reconstructs the dynamics of a $2 million portfolio in 10 years. The first strategy assumes that Bitcoin (BTC) surges with 40% CAGR, the investor only takes $100,000 per year to pay the bills, and pays 20% in income taxes.

After 10 years, the strategy (thanks to cautious selling and stable solid CAGR for Bitcoin) leaves the investor with over $49.7 million in cash.

The second strategy offers the investor to spend 80% of the portfolio on some traditional asset that is considered to be good at yield generating:

Now assume instead you spent 1.59MM of the 2MM on a high yielding asset like Texas real estate at 10% (if you can even find one).

After that, the user can still invest $410,000 in Bitcoin (BTC). Ten years of following the second strategy leaves the investors with $11 million, Fred Krueger opines.

Better alternatives? MicroStrategy, lending, cycles

The commentators to his thread, in general, agreed with the benefits of the strategy. Meanwhile, they added a number of caveats to evaluate it.

First, every time the first investor takes $100,000, it is equivalent to various amounts of BTC due to its cyclic price dynamics. No one can be sure when exactly it is the most profitable to sell.

Also, some followers highlight that the most profitable strategy might imply borrowing USD against Bitcoin (BTC). The borrower doesn’t need to pay capital gain tax and always keeps their BTC allocation safe instead of only paying 12% as interest.

Stocks of Strategy (MSTR) and MSTY, an Option Income Strategy ETF based on the MSTR performance, were also numbered amid potential alternatives.

Bitcoin (BTC), the largest cryptocurrency, is down by 1.5% in the last 24 hours. Bitcoin (BTC) is changing hands at $104.500 as of press time.