Retiring bitcoiners struggle to strike the right balance between bitcoin and traditional assets in their portfolio.
“Never trade bitcoin.” “Hodl.” “Don’t try to time the market.” “Buy every dip.”
This advice earns folks a permanent ticket on the roller coaster ride of bitcoin volatility and in my experience causes them to be over allocated to bitcoin heading into retirement.
And they consistently buy dips all the way down during bear markets because they are following half baked takes from bitcoin X accounts that don’t professionally advise others on their money. They just produce content for attention and clicks, not for sound guidance on your portfolio.
Why do those phrases cause people to be over allocated?
Because, HODL is a great marketing term, but a poor risk management practice. HODL might work for young folks or those with a small, relative allocation to bitcoin, but for retiring bitcoiners that are heavily invested – it’s a potential recipe for disaster.
What HODL subliminally communicates is that you’re ignorant if you ever sell Bitcoin. And what usually follows that mantra? Stack (or buy) the dip. So bitcoin holders buy the entire way down during bear markets. Do they accumulate more bitcoin at better prices? Sure. But when bitcoin recovers, suddenly they are 70, 80, or 90% allocated. Plus, some bitcoin derivatives like MSTR are thrown right on top. And now the euphoria or optimism kicks back in that hopium price predictions will soon come true and HODL is easy when you expect your net worth to 3x in the next 12–18 months. Not to mention you keep buying more, because “this is the supercycle” “bitcoin is permanently repricing higher” and subconsciously you feel you’ll be left behind. Risk management is discarded and replaced with greed disguised as conviction.
Again, that may work for young folks who don’t need the money for 30 years. But what about the 55 year old wanting to retire as soon as possible due to poor health from his stressful job and a strong desire to make up for lost time with his family. That doesn’t work so well.
Why not? Because what follows blind optimism and euphoria – inevitably (so far) is the next bear market. And now, instead of 30% of his net worth dropping by 60%+, it’s 90% of his net worth falling off a cliff.
He retires and shortly after he goes from being worth $5M to $2M in a matter of months. His 5% withdrawal rate now skyrockets to 12.5%. Safe quickly turns dangerous. Confidence gives way to doubt. Peace evaporates. Stress eats at the back of his mind even though he doesn't communicate it, because he can’t publicly admit anything negative about bitcoin. He tries to remind himself to HODL. He reads X posts and listens to podcasts that will help him weather the storm like he has in the past, but this time it’s different. He traded work stress for financial stress, despite telling himself he would manage his stress better in retirement. He wasn't fully present before and retirement was supposed to fix it, but it hasn’t. His wife wants to take that trip they always talked about. Before retirement he couldn’t possibly take that much time off, but now that his time is free – his wallet is saying no. She doesn’t understand… a few months ago he said they would be very wealthy and never have to worry about money… So what happened?
He failed to manage risk at the precise time it was most important.
But imagine a different version of that same story. Same guy, same bear market, but this time, he managed risk before retirement, not after. The bear market hits and he doesn't flinch. His wife doesn't worry. The trip doesn't get cancelled. That's what the right approach makes possible.
That’s what we do for our Strong Wealth clients.
How? We help our clients strike the right balance to preserve upside potential, without unconsciously walking into the trap above.
We split bitcoin into 2 buckets within our client’s financial lives and in our opinion, this is the best way to approach portfolio management for retired bitcoiners.
Bucket #1 - Long term savings technology: bitcoin in cold storage, never touched, optimized for security, sovereignty, and long term wealth generation.
Bucket #2 - Investable asset: bitcoin has demonstrated strong price appreciation with a consistent cyclical pattern, so why not intelligently trade bitcoin to take advantage when it’s performing, but sell when the script flips to protect downside risk.
Let’s dig deeper into each bucket.
Bucket #1
This bucket is how most bitcoiners think of bitcoin within their financial life. This bucket captures the thesis of permissionless, scarce, digital money. It doesn’t require you to trust a counterparty. It protects you against the unsustainable trajectory of fiat money, provided bitcoin is the ultimate winner of the transition to what’s next. Which of course, we believe is more likely than not, but there’s no guarantee.
This bucket is secured for the long term and typically viewed as a generational wealth tool for our kids and if we’re lucky, our grandkids. It’s built for sovereignty and rooted in the original bitcoin ethos.
What is the right allocation for bucket #1?
Well, in true wealth advisor fashion, it depends. It’s different for everyone. But to find it for yourself, you must find the sweet spot between…
That’s the tension. That’s the dichotomy. Only you can arrive at that for yourself. But most bitcoiners don’t intentionally make this decision. They let the endless stream of bitcoin content and narratives distract them from building a sound plan unique to them.
What do you need to find that balance?
Well, like any good financial plan, we need to consider a few critical things:
I know questions 3 and 4 are two extreme scenarios and reality will likely be somewhere in the middle, but if you planned for the worst (on either side of the distribution of outcomes), then you’ll likely be happy with a middle outcome.
And to be clear, there’s not a precise mathematical answer that just needs to be calculated. The future will not look like something we can concoct in a spreadsheet or software. But this at least solidifies a foundation to make sound decisions with the information we have at hand. More to this point, retirement plans and portfolio strategy can adapt over time as new information becomes available. Not only CAN it adapt, it SHOULD adapt. It should change. That is what the smartest people do – they change their mind when new information is presented to them. So, don’t feel like you’re making a permanent decision. That’s what gets bitcoiners in trouble in the first place. That’s what the mantras of HODL, stack, and never trade have reinforced for years. Don’t let yourself be chained to old thought patterns, this new season of life requires a new mindset. It requires a new approach. An approach that intentionally (and intelligently) manages risk to safeguard your family’s future, no matter what happens.
Bucket #2
Most bitcoiners view their bitcoin as completely separate from their traditional investment portfolio. It's in cold storage, it's permanent, and it's not to be touched. They think that bitcoin can only fall within bucket #1. That mental wall prevents them from seeing something powerful, you can hold bitcoin in both places at the same time, for two entirely different purposes. When you add a bitcoin etf position inside your traditional investment accounts, your total bitcoin exposure across your entire net worth goes up. You actually end up with a higher global allocation to bitcoin than you would with cold storage alone. But here's the key, that increased allocation only exists when it's beneficial. When conditions change, you fully exit that bitcoin etf (bucket #2) position based on a systematic approach and your total bitcoin exposure comes back down to just your cold storage bitcoin during the (what can be brutal) bear markets.
Bucket #2 is for viewing bitcoin as an investable, tradeable asset. The mindset that I just mentioned (in bucket #1) of feeling like an allocation decision is permanent, nudges bitcoiners to lean towards a higher allocation in bucket #1, because they don’t want to miss out on the potential future they’re confident in. They don’t want their life circumstances or doubt to talk them out of what they’ve studied 10,000 hours to build conviction around. But that nudge edges them right back into poor risk management. In our experience, once bucket number 2 is offered, not only as an option, but a smart one, nearly everyone feels the pressure lift, the gorilla leaves their back, and they feel a sigh of relief.
Bucket #2 offers them the ability to participate in bitcoin’s upside whenever and to whatever extent that might happen, while still protecting their downside during bear markets or longer than expected, sideways chop. They don’t feel like they’re “giving up” on what they’ve worked hard for. They don’t feel like they’re a “fake” bitcoiner. In fact, when the light bulb truly turns on, that’s when they realize following a simple trading approach may even outperform buying and holding bitcoin within bucket #2. Crazy… I know. This would get me stoned on bitcoin X. But there’s simple, systematic, data driven approaches to trading bitcoin that have outperformed hodling bitcoin with a lower downside.
This is what we offer our clients. And again, you’re not trading your cold storage stack. It remains in self custody. We’re trading within traditional investment accounts (brokerage/ira/roth ira) at a custodian.
This approach allows our clients to still benefit from the potential upside of bitcoin over the long term without causing them to be offsides in the short to medium term during retirement. It allows them to sleep better at night. It allows them to look to the future with confidence. It allows their spouse to buy-in to their retirement plan. It allows them to say yes to that trip without telling their wife to wait another 4 years.
We implement this bucket #2 alongside traditional assets within a portfolio strategy that is built to benefit from the Fourth turning. It’s built to profit off of financial repression and monetary debasement. It’s built to benefit from negative real rates. It’s built for high inflation. It’s built to benefit from the bitcoin thesis playing out, it just doesn’t require bitcoin to play the full role we all hope it does.
This portfolio strategy is built to be unemotional, systematic, and to capture long term trends in bitcoin, commodities, and equities, no matter where the dust settles when this once in a lifetime transitional period is behind us.
Why do we believe this is the best approach?
Because, if the suddenly part of “gradually, then suddenly” happens more suddenly than we think it can, our client’s will be great. While, at the same time, if the gradually takes a lot longer than we think, our client’s will still be great.
This view allows our clients to check all the boxes:
It allows our clients to have the best of both worlds. No one needs to be 100% allocated to bitcoin. Decide how much cold storage bitcoin is enough and then hedge against being wrong on outcome or timing with the rest of your assets when you’re heading into retirement. This is the smartest approach.
Let's go back to the 55 year old. Same guy. Same $5M net worth. Same desire to retire, be present with his family, and leave the stress behind. But this time, he didn't let HODL and narratives dictate his entire financial plan. He separated his bitcoin into two buckets. His cold storage sat untouched – sovereign, secure, and right sized to an allocation he could live with no matter what happened. The rest of his net worth was managed across an active, diversified (but still positioned for growth) portfolio that included a bitcoin position within bucket #2. When the bear market hit, bucket #2 had already exited its bitcoin position based on a systematic signal. His net worth didn't fall from $5M to $2M. It pulled back to $4M. His withdrawal rate didn't skyrocket to 12.5%. It moved to 6.25% – not dangerous. Not life altering. He didn't doom scroll X looking for reassurance. He looked at his plan, saw that it was working the way it was designed to, and went on with his day. His wife brought up the trip again. This time, he didn't hesitate. He said yes. Because he could afford to. Because the plan accounted for this. She felt secure. He felt confident. And the stress he left behind at his job didn't follow him into retirement, because he made the right decisions before he walked out the door.
If you’re interested in working with us to build a retirement plan that allows you to be the second, happier 55 year old, schedule a call through www.strongwealth.net
Not ready to book a call, but you want to learn more about our asset management strategy? Watch this breakdown of our Fluvius approach: https://youtu.be/GpuIFSWefXY?si=XEkU_e7_nakTAErg