The historical value of those bitcoins if sold now
The current state of the US dollar relative to other currencies
How inflation impacts the purchasing power of USD over time
The volatility of the cryptocurrency market compared to the stock market
How to convert cryptocurrency values into a more tangible measure for comparison
Playbook
Check the current price of 1 bitcoin on a trusted cryptocurrency exchange.
Multiply the current price by 4064 to get the total value of your bitcoins.
Review recent economic reports and central bank statements to understand how inflation is affecting USD.
Analyze past performance and volatility of both cryptocurrencies and stocks.
Consider the tax implications and fees associated with converting cryptocurrencies into fiat currency.
Evaluate potential risks and rewards associated with keeping your assets in cryptocurrency versus investing in traditional markets.
Decide whether the value of your bitcoins justifies selling them based on your financial goals and risk tolerance.
Example
If 1 bitcoin is currently valued at $35,000, then the total value of 4064 bitcoins would be $142,240,000. If you had sold those bitcoins in 2021 when each was worth about $50,000, you would have made $203,200,000. However, if you had held onto them until today, you’d have seen a significant drop in value due to market fluctuations. Considering inflation over this period could help you understand how much less buying power you have today compared to when you bought your bitcoins.
Question
Is it better to keep my cryptocurrencies or convert them into USD?
Answer
The decision depends on your financial goals and market outlook. If you believe that cryptocurrencies will rebound or if you need liquidity for other investments, converting might be wise. However, if you think holding onto them could yield better returns over time or if you’re looking for diversification from traditional assets, keeping them could be more beneficial. Always consider tax implications and consult with a financial advisor before making any decisions.
Risk management you can actually use
Risk per trade = account equity × risk% (e.g., 1%).