Bitcoin 101: The HODL Method

(Last Updated on March 15, 2021)

First time investor?

Just heard of “cryptocurrencies”?

Focus on Bitcoin.

Research, educate yourself, and learn about what Bitcoin is, Satoshi’s principles, how the blockchain works, learn about “proof of work” vs. “proof of stake”, and more.

If you are new to Bitcoin, please focus on acquiring a strong position in BITCOIN before entering any other high risk/high speculation investments in altcoins.

There is not ONE altcoin that can rival Bitcoin in value and investor confidence today – not anytime soon and most likely never.

There will never be another Satoshi and a free, anonymous, world wide web like we had in 2008.

Why HODL?

Hodl Method = Simple, low risk, time proven strategy to lower average buy price entries and build long term wealth in BTC.

Please do not go diving off the deep end into a complicated world of altcoins and DeFi. Many ERC-20 based tokens are purely “copy + paste blockchain projects” that barely represent a working product or have any unique utility. We are seeing a massive influx of scammers, dupers, fraudsters, and thieves like the ICO days of 2017 and 2018.

Tempted by get rich quick schemes and overnight millions, people lend or give out their Bitcoin like fools.

Just HODL!

Is it not enough to get 200% YOY gains by just holding an asset?!

Outflow of Bitcoin off exchanges to HODLers continues to pressure coin supply

The amount of long-term hodlers continues to increase day after day..

Plus, there are a WHOLE lot of value investors already beating you to the punch and have secured a large percentage of Bitcoin. These investors will be continuing to put pressure on exchange supply and coin prices long term. In effect, squeezing the market to higher prices with a hard capped supply and a continued outflow of Bitcoin to hodlers off exchanges.

Invest and have a low time preference for life changing wealth

Not your keys, not your coins!

Build financial sovereignty through securing your private keys – take ownership.

Do not give out your private keys – to any individuals, institution, or software program, unless you are willing to lose them forever. Thousands of people lost ALL of their Bitcoin or other investments during that time. Be wary of scams, especially during peak bull run hype and high speculation bringing a lot of attention to hodlers. Cryptocurrency is FULL of these people every time we see the media swarm around cyclical bull runs and surging prices. Do not lose sight of what has value in this digital space.

Be consistent and be patient.

Patience and diamond hands for life changing wealth.

Easiest, time proven method for high returns on Bitcoin. Simple to setup and get started, invest with a low time preference and be patient, take large profits after the next halving or continue to hold for long term wealth.

The stronger the hands, the tighter the squeeze, and total available coin supply is getting increasingly thin.

Patience utilizes time as your invest multiplier and nothing is stronger on the monetary forces of Bitcoin. Sit back and watch as this new asset evolves and soaks up the never ending inflationary wealth of fiat countries around the world.

Delayed gratification is the game.

Patience is the #1 trait of successful investors.

Zoom out – look at the daily, weekly, and yearly charts for Bitcoin.

Safest and Simplest

Make routine, small purchases of Bitcoin based off current income levels, debt, and individual investor risk profile. Tuck those satoshis away in a hardware wallet and do not touch them for years. No taxes. No hackers. Low risk, high reward hedge against inflation, censorship, government corruption and money printing..

Pay wallets directly with your iPhone or Android by a wallet QR code or address. Pay nothing but on-chain fees.

Do not lend out your Bitcoin.

Use your own NODE to secure all transactions and validate yourself!

Keep it simple stupid!

Long term holders have far outperformed short term trading strategies in BTC

200 Weekly shows how profitable weekly buys turn out to be

Daily and weekly buys have been shown to clearly outperform single time purchase and hold strategies.

You can’t time the top or bottom.

99% of ‘traders’ fail in calling bottoms and tops, so why try?

Consistently averaging out your Bitcoin purchases, every day or week, helps eliminate short term highs and lows to average out a profitable average BTC cost.

By dollar cost averaging you will buy smaller amounts each time and complete many consistent purchases over time. I would always recommend setting your dollar cost average purchases at a risk assessed percentage of income. This helps improve your success rate at “timing your buys” during the dips and lower prices which make up the duration of most assets. This way you can be confident that the longer you are regularly dollar cost averaging, the stronger your purchasing average will become.

Mayer Multiple is a clear indicator that dollar cost averaging results in smart dip buying and BIG profits

Check out MayerMultiple.info for great insight into the percentage of time Bitcoin sits as its “high” prices. You’ll quickly see how much opportunity exists below the orange average price line – this is where any purchase of Bitcoin is rewarding you with large returns at the highs.

The wild volatility and evolution of growth that digital assets are experiencing since inception is confirming what most investors know – timing the markets and predicting the future is hard, and even more impossible when it comes to Bitcoin.

Taxes!

Please look into how Bitcoin (and all cryptocurrencies) are taxed in your region. Here in the United States you will pay taxes on ALL transactions where Bitcoin, or any digital asset, is sold, traded, or used in a payment.

Best tax strategy for U.S = Buy Bitcoin, hold long term, sell and incur capital gains only after large % returns

How is Bitcoin taxed in the U.S.?

(You will pay capital gains tax – short term 20% / long term 10%)

-> Pay tax on every trade from Bitcoin to other cryptocurrencies and stable coins

-> Pay tax on any and all sales of Bitcoin

-> Pay tax on all payments using Bitcoin or any cryptocurrency

*DO NOT incur taxes when buying and holding a digital asset

Every trade from Bitcoin -> ETH -> UNI would incur taxes each time you “sell” one cryptocurrency for another. This makes it very difficult to increased profitability while trading unless you highly successful in your trade executions. Paying the highest, short-term, capital gains currently at 20% or paying income tax on those gains (as high as 55% for Canada and some wealthy individuals in the USA) makes it tough to continue capitalizing on those gains.

THE HODL METHOD

1. Dollar cost average a % of your cash flow income to Bitcoin

Set aside a percentage of your income to purchase Bitcoin on a regular schedule. Raise the % based on debt to income ratios and ability to sustain long periods of low prices without selling BTC.

-> If you are young and have a higher risk tolerance – hedge 10-40% of your current income for life changing wealth in 10, 20, and 30 years.

-> If you already have a significant portfolio of traditional assets – hedge a higher % of passive income for a year or two to help balance your overall position.

-> If you are already retired and have a lower risk tolerance – swap a risk assessed % of your traditional IRA or 401k into Grayscale Funds (gBTC) to hedge and then dollar cost average a % of passive income.

2. Use Strike App to send Bitcoin directly to your hardware wallet

Exchanges are a decent way to purchase Bitcoin if it is your only route. But you will be subjected to price premiums, deposit/withdrawal fees, and other headaches that will hinder your movement of coins into your hardware wallet. Strike enables you to buy directly from the Bitcoin Lightning Network and send any amount of satoshis to your cold store directly. No middleman, no deposit and withdrawal requirement nonsense, no waiting. It is lightning fast and you’ll pay only on-chain fees.

3. Save “dry powder” in bank account for larger dips

Now that you’ve been following Bitcoin for a few months, or years, it will be a bit easier to recognize decent buying opportunities when prices dip. You’ll have a stronger sense of pumps that have no backing during bear markets and bull runs where peak after peak keeps coming. DCA keeps you honest as you’ll fail to call tops and bottoms, but overall you’ll find success with a low time preference.

4. Invest with a low time preference

Hold onto your stack of satoshis for at least 5 years.

Diamond hands only.

– Wall Street Bets

Study after study on Bitcoin has shown that dollar cost averaging is the best method for the average investor to get a strong return and additional hedge against inflation. You’ll flatten out a lot of the daily volatility by having such consistent, small purchase buys to gather your average base. This will produce high % returns on bull markets half a decade later.

5. Not for weak hands!

The most valuable advantage the young investor has is time.

Time is the largest multiplier of wealth – own assets and let them grow.

Warren Buffet became one of the wealthiest investors in the world through value investing and patience. His focus was always on picking a quality company and dollar cost averaging through the dips, building a strong position and holding long term for life changing wealth.

You ARE making a VALUE investment – have conviction in this evolution of traditional financial markets to the digital age and Bitcoin’s long term success within that ecosystem.

Although Warren may think “Bitcoin is rat poison squared” – his methods work excellent in this digital asset space. He is a DINOSAUR of the old investing world anyways, so do not take his or other worthless FUD too seriously!

Why does a digital asset have value?

-> Unique properties – Bitcoin is the original blockchain and has genuine decentralization (no other token has this – all other projects have some centralized creator, company, founder, or such that is looking to earn profits and make a business out of it)

-> Original code – ETH was built completely by scratch from Vitalik Buterin and is now copied by millions of random token projects.

-> Use cases and utility – ADA is a completely original blockchain built by Charles Hoskinson but has literally ZERO use cases in the digital ecosystem today.. Projects in DeFi might be based off ERC-20 blockchain, but solve problems in traditional finance like access to lending, liquidity providers, yield farming, etc.

Bitcoin is hands down the winner

Bitcoin is fixing the world through financial sovereignty for the individual and companies.

-> Genuine decentralization… unless Satoshi appears.

-> Over a decade of success continuing the strongest, most secure, financial computer network in the world

-> SEC has already defined it as property

-> Massive and most trusted infrastructure to onramp retail and institutional users

There is no competition for the #1 spot in digital assets in terms for value proposition, infrastructure, and confidence of the markets.. All other altcoins, including Ethereum are awaiting more clarity from the SEC and CFTC whether they are securities or not. Expect all altcoins to suffer violent cycles and many, if not most, will not succeed long term.

Choose your investments wisely and always do your research!!

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