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Moonmath revisited

Posted on by Bitster Money Mustache / 2 Comments

A few months ago I wrote an article called “Moonmath“. It was basically a thought experiment of how it would’ve been like had I found Bitcoin ~4 years (one cycle) earlier than I did. Turns out it would have been more or less identical in terms of fiat invested, time spent, gains made.

In short, I started to invest in Bitcoin in October 2017, a few months before the previous ATH. I have bought Bitcoin every month ever since, usually with a fixed amount of 500€ (two exceptions). During the previous 3+ years I’ve managed to gather almost 3.8 BTC. I wanted to know how much Bitcoin (and fiat) I would have had if I had started to invest before the 2013 ATH and had invested the same amount of fiat every month and continued to do it for the same amount of time. The results are presented in the figure below.

The orange line (actual) is my Bitcoin holdings euro value. The green line (moonmath) is the imaginary euro value of my BTC stack if I had found Bitcoin 4 years earlier than I did (you can basically think the X-axis in -4 years in this case). I think it’s pretty remarkable that I’m actually better off right now (in fiat terms) than what I would’ve been in late 2016 after 3+ years of religious stacking during 2013 – 2016. Sure, I would’ve had nearly 80 Bitcoin in that case and fast forward to today I’d already be a millionaire. But that is kinda my point.

There’s no shortcuts to Bitcoin success.

All of the ‘lucky’ early Bitcoiners also needed to start the stacking, also needed to continue stacking (for many years) and only with a sufficient amount of time passing were they vindicated.

I can be envious to someone who holds 80 Bitcoin today. But that someone has also most likely dedicated 4 years more of his life to Bitcoin compared to me. Someone in 2024 will be envious of my ~4 Bitcoin and so on. All you can really do is start stacking them sats *right now*. Everybody has been in the same place, everybody wished they found Bitcoin earlier. But it wasn’t any easier for those early folks. You need them years under your belt. You need to stack sats and stack them Bitcoin years.

To conclude, I’m gonna extrapolate the aforementioned moonmath, basically checking out how’s this accumulated ~80 BTC gonna perform during the bullmarket of 2017. Gotta say, I like the sight of this. This shall be my blueprint for 2021.

–Bitster Money Mustache

Post/stackingem

Stacking ’em Volume 6 (November 2020)

Posted on by Bitster Money Mustache / 7 Comments

Another month goes by, another salary hits the bank account, another Bitcoin purchase, another ATH (two ATHs actually). BTC was bought at 11655€ / BTC which is the highest price I’ve ever paid (fuck me, THREE ATHs). Stack grew to ~3.78 BTC which is obviously an ATH, like every month has been and every month will be. Fiat worth flew past 40k€ which is the 3rd ATH.

Feels like something is starting to happen. Bitcoin has started to ‘only go up’. It’s been a long 3 years, stacking through the bear market, every now and then watching the price briefly shoot up, only to eventually go back down. But now, it seems like finally the long awaited bull market has arrived. Though for me, truly the new phase will start only after the previous ATH has been broken.

If we look at historical prices, the late November 2013 ATH was broken in early January 2017 – roughly 3 years & 1 month later. If this behaviour was to repeat, the mid December 2017 ATH should be matched late January 2021. Less than 3 months to go then. That is a ridiculously short span of time but still it feels like we might get there even sooner than that. Three months in Bitcoinland feels like forever. This is, among other things, why Bitcoin is life extension 😉 Let’s look at some charts:

BTC amount approaching four with a flattening curve. Fiat amount shooting upwards in a near vertical fashion. It took me quite a while to hit 20k€, still pretty long after that to hit 30k€, quite damn fast to hit 40k€ – interesting times ahead, need to start planning for that 100k party (private of course, no talking about these things in public). I expect the 3 year period of 2018 – 2020 to quite soon look like a flat little alley, just like the Bitcoin price charts always look. Next chart:

The bars represent monthly Bitcoin purchases. I’m officially on green with every single BTC purchase so far. January 2018 was the previous highest price I paid and that was around 11300€ / BTC. On average, I’m up ~95% on every purchase and I have made slightly more than 100% with the total amount of money put in (the difference comes from two good months where I was able to use more than 500€). Pierre Rochard has described Bitcoin as ‘savings technology’ and I think he is correct.

We can compare Bitcoin to ancient savings technology that is the S&P500:

I might need to rethink this chart for next months post because it gives the S&P (blue) too much slack. You can basically see the hypothetical fiat amount had I bought the S&P with my monthly purchases instead of Bitcoin. Sure we can see from this chart that Bitcoin has been the better bet. But not the magnitude. S&P would have given me a measly return of 15.5% so far for the money put in. Bitcoin has given me 112%. Which means that my Bitcoin investment strategy has given me 625% better return than the S&P would have.

Superior savings tech.

Something (obvious) I thought today: The amount of coins mined during the previous epoch (2016 – 2020) was so much that the same amount will not be mined during the rest of human race existence. Same applies to the epoch we are living right now (2020 – 2024) and to every epoch afterwards. We are constantly living through an opportunity that will not happen again in anyones lifetime. It’s impossible to be ‘too late’. We are constantly front running the future.

If you haven’t already, start stacking them sats. You know you want to. It’s never too late – we are always early – compared to the epochs that will follow and the people who will join.

-BMM

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Benchmarking Bitcoin

Posted on by Bitster Money Mustache / 6 Comments

Before I found Bitcoin, I was pretty obsessed with the early retirement / financial independence sphere. If you have no idea what I’m talking about I recommend you check out MMM (even though the last time I checked he has zero understanding about Bitcoin).

The idea is basically this: You save as much from your salary as possible. With it you buy index fund ETFs (because we assume they will forever go up on average ~7% per year, historically has been the case). You repeat this many years and two things will happen. One, you will become frugal and your monthly expenses will be low. Two, the ~7% your ETF ‘stack’ will produce in perpetuity will be enough for you to live on. Now you can retire. Simple as that!

Sounds very familiar doesn’t it? These boys are stacking stocks.

There’s however a slight difference in thinking in my opinion. They don’t understand money, should I say, at all. They think they are building a money machine that will never run out of steam. And when the machine is ready, they can sit on their asses for the rest of their lives and the money will never run out. I’m not sure they understand that they are cheering for money printing and aim to be the beneficiaries of the Cantillon effect on ‘everybody’ else’s expense. Compare the situation with Bitcoin stackers. Sure, we also aim to build a stack that will last ‘forever’. But every time you sell Bitcoin, you will have less Bitcoin. Even if your fiat net worth increases forever. On a thought level, we understand that living off of a stack you’ve built is not a long lasting solution.

There are no parasites in Bitcoin.

Nevertheless, I’m stacking sats and they’re stacking stocks. I thought it might be a good idea to benchmark my progress to the standard method of buying S&P500 each month. Because, even if I made +200% on Bitcoin I shouldn’t be too happy about it *IF* I would’ve been able to get +300% by simply buying the S&P500. Let’s look at the chart below.

The orange line is my Bitcoin stack in euros. The blue line is what would have been my S&P500 stack had I bought it instead. The total amount of fiat put in is the same, roughly 20k€ (divided in monthly purchases). Bitcoin has given me nearly +70% while the S&P would’ve given below +20%.

This is where you see the power of volatility. At first glance, it might seem like a bad idea to start investing in Bitcoin in the middle of the bull run in 2017. And sure, I bought the top, and bought the way down and the stagnant bottom, and I was down on my investment for quite some time. Meanwhile the S&P only goes up, surely its a better bet to put your money in the S&P. Fast forward to this moment and my Bitcoin strategy has significantly outperformed the S&P, even though we were basically in a bear market majority of the time.

So, if you’re reading this and using the S&P as your main investment vehicle, it might be a good idea to tip your toes in Bitcoin. Start low and build from there. Someone recently pointed out that your BTC allocation is correlated with your Bitcoin knowledge. I agree. This is why so many still have a 0% allocation. They don’t understand Bitcoin. And if this is the case, they are completely right to keep the allocation at zero. But instead of accepting a zero level knowledge, they should start to learn about Bitcoin. They should start to question their views. They should ask: ‘Why does a billion dollar company CEO decide to buy hundreds of millions worth of BTC?‘. Is it because he is dummer than you? Or is it because he knows something you don’t?

–Bitster Money Mustache