Bitcoin came down from $2900 to $2100 over the last 36 hours or so and left me wondering what to do. Clearly if I knew it was going to happen, I’d have traded it for Tether (USDT), which holds its value at about one dollar. That’s the equivalent of selling it all for dollars except it doesn’t trigger a taxable gain! Then I would use it to buy Bitcoin back at the bottom of the drop. Unfortunately, my crystal ball is broken and I didn’t expect it.
So, after the fact, what should I do?
I could 1) sell off half of it and keep the rest or 2) sell all of it or 3) keep it all. After watching the price bob up and down, I did a little arithmetic. With Bitcoin at $2200, it has gained 33% in only 2 weeks. That’s more than 800% annually! No asset or other financial investment can sustain that rate. Even after this large drop, Bitcoin is up about 2.6%, which is still 68% annually.
Given all the above, I’m going to hold on to all of it.