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PaperclipPerfector  1d ago (text post)   807 thread views

Small-Scale Question Sunday for August 17, 2025

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With all of the enthusiam of Ben Affleck, I figure that I should put some of my investment portfolio into Bitcoin. I expect that it'll move independently of or in opposition to the dollar. What is the boring approach do that, adjusting a boring set of current allocations across the usual boring large investment companies?

What is the boring approach do that

Dollar cost averaging. Takes time though (and of course the time to start were like 10 years ago :) You can either buy regular BTC (combined with cold-wallet storage, that protects you from certain third-party risks, remember - not you keys means not your coins) or if you're only interested on hedging and not owning actual BTC, then ETFs of course. There's a bunch of them from reputable providers now (I don't use them but I've heard about them). Look at the feeds - some ETFs for some reason have insane fees, over 1%, which is totally not warranted given they don't do anything but holding BTC. I see no reason to use those, use cheaper ones instead.

Do you have any desire to have access to/use the BTC, as in gain custody of them on a private key you control?

If not, an ETF is the straightforward choice.

If so, a coinbase account is easy, but there are numerous options.

Coinbase accounts are custodial accounts, which means they hold they keys and you just see the numbers on the website. You don't actually own any crypto, you just trust them to own it for you. Which may be ok for many people, but if that bothers you then you should get a real crypto wallet and hold your own keys. The danger here is that if you mess it up you could either lose the coins completely or get them stolen from you. Coinbase Wallet is one example of non-custodial wallet, though I am not sure how good it is (I personally prefer offline hardware wallets).

Worth noting that in contrast to normie banking, the main bitcoin marketplace regularly blows up/top guy absconds with the money (Mt gox, FTX) . Crypto makes it so much easier to be a thief and a scammer. Better prepare yourself mentally. Worse part is not even losing all your money without recourse, but the merciless sneering from cigar-chomping bankers.

That's exactly why I said "not your keys, not your coins". If you keep the keys, none of the blowups can hurt you, ever (well, if you keep away from shitcoins and NTFs, of course) - whatever happens, if you owned 1 BTC, you'll still own it as long as you have the key (and nobody else does). If you play speculative games (like, trade shitcoins, etc.) then well, it gambling, and you may lose all your money at any moment. So coming at it, decide if you're there to invest or to gamble. Both can be done, but the way they are done are very different.

My theory of crypto value is that most of the coin gets stolen every few years. The thieves, fearing being connected to the crime through the ledger, never dare to touch their ill-gotten gains. One day, as we all must, they die, rich in spirit, and their cursed coins follow them into the grave.

Destroying money is strongly deflationary. There‘s only like 6 bitcoin left in circulation, that‘s why they are getting bid so strongly.

My theory of crypto value is that most of the coin gets stolen every few years.

If by "the coin" you mean bitcoin, it's not true. Currently, about 20 mln bitcoin is outstanding. Known bitcoin thefts, as far as can see, over all history, amount to under 1.5 million, and significant part of it has been recovered. Of course, some thefts may not be discovered until the funds are moved - if somebody knows your keys, you wont know it until they move the coins. But then it doesn't make any difference on the pricing. As I see from reports, e.g. https://river.com/learn/who-owns-the-most-bitcoin/ most bitcoin is owned by individuals, and the largest custodian of bitcoin is Coinbase, which holds around 10% of the supply. Which puts it in roughly the same position as Chase bank (the largest US bank) has in dollar economy.

If you talk about shitcoins, anything is possible, it's a wild chaos and pretty much any wild claim could be true for some subsets of them.

There‘s only like 6 bitcoin left in circulation, that‘s why they are getting bid so strongly.

That's hilariously far from truth, Coinbase alone has over 2 millions, and since it holds the keys for every single one of those, it can trivially recover coins that are known to be stolen. And if they are not known to be stolen, again, there's no difference in economic effects - if the original owner did not intend to move them and also the thief doesn't move them, there's zero effect. One can only wonder - why would anybody bother to steal anything in order to never ever use it?

Those 2 million aren’t in circulation per se, though, since the mantra of most owners is to buy and hold. In many ways it’s a demonstration of the issues with non-fiat, non-inflationary money.

I view the custody concern only in terms of "my financial advisor stole everything and disappeared". At the scale of those ETFs, I don't see the bitcoin assets being significantly different from any other assets under management. That page looks helpful, thank you.

If you are using bitcoin as a hedge against financial collapse, it's a bit risky to use custodial counterparties that would go under in the event of a financial collapse.

It's an interesting question whether Coinbase is already qualifying as "too big to fail". I'd say probably not yet, but could become before this decade is over. Of course, massive regulatory interventions would accompany that.

Thus far bitcoin has largely tracked US equities with higher beta. Given that bitcoin shares an investor base with leveraged magnificent 7 etfs, with many day traders, growth funds, FAANG gamblers and venture capitalists, the expectation would be that in the next financial crisis and stock market collapse that it would suffer a great fall in value. There has never been a prolonged global financial crisis in bitcoin’s existence.

There has never been a prolonged global financial crisis in bitcoin’s existence.

Clearly Bitcoin is warding off large financial crises!

More seriously, this has been my main logic for never going all-in on BTC.

All-in would not fall under "boring". I'm pretty much looking for different ways to manage sequence-of-returns risks, before I pull the trigger on retirement.

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