I Blinked – I Sold My Bitcoins

It’s very hard to keep emotions out of investing. No matter how much I tell myself that I am investing for the long term, and down markets are good, I am still human. I still wonder whether holding an investing that keeps going down is the quintessential equivalent of me trying to catch a falling knife. It’s hard looking at my portfolio and seeing it drop nearly 50% in value. While it’s easy to tell oneself that this time is no different than any other decline in the market, it’s sometimes much harder to stomach that massive drop in one’s portfolio. So, I blinked. For the reasons that follow, let’s see why I chose to cash out of my bitcoins.

Credit Card Debt

My credit card debt was getting to me. Prior to purchasing the beach condo, I was paying off my balance every month. But ever since I made that purchase, it’s been downhill from there.

Thankfully, my finances has stabilized. But, the end result is a massive amount of credit card debt. At the time of this writing, my credit card debt is projected to be about $9500. Yikes.

My initial plan was to payoff the credit card debt by October using the income from my day job. I was confident that I could do that, but I also had a back up plan. If I weren’t able to payoff the debt by October, then I would simply sell some of my bitcoins to payoff the difference. However, implicit in this backup plan was the notion that my bitcoin portfolio was enough to satisfy the balance.

Unfortunately, the crypto market has been crashing, and my portfolio lost nearly 50% of its value at the time of this writing. Fearing that the market would continue to fall, such that my portfolio was less than the amount needed to payoff my debt, I decided to sell most (about 98%) of my bitcoin portfolio.

So now, I can report that my credit card balance is once again at $0.

Why Bitcoins?

The natural question is, why sell bitcoins? If you look carefully at my dividend portfolio, you will see that I had enough money in my stock portfolio to payoff my credit card balance. However, if you recall, I had already liquidated my dividend portfolio to purchase the beach condo. I was not about to do so again to payoff debt.

I truly plan on investing in my dividend portfolio for the long term. Notwithstanding my introductory paragraph about emotions, I do think that a down market in the stock market is a good thing! It allows me and other investors to purchase stocks while they are down so that we can acquire more shares than normal.

The fact that I don’t plan to retire for another 11 years just confirms that I am invested for the long term.

But, to me, crypto is a far more risky asset class. It also doesn’t have the long proven history that the stock market has. Many YouTube gurus posit that bitcoin could reach $100,000 or even $500,000. However true that may be, there’s no telling if and when that will happen. That’s because no one really knows what the market will do.

What I do know for sure is that my portfolio was way down, and I was uncomfortable with the risk of it going down further.

Although I didn’t make as much money as I could had I sold even just a few weeks earlier, I still sold at a profit! So no complaints from me.

Now What?

One of the important things to remember is that no one really knows how long the bear cryptocurrency market is going to last.

Even though I sold out of my bitcoins, I continue to dollar cost average my way back in!!!

However, I wanted to ensure that I had my priorities straight and that my financial house was in order. In other words, now that I am consumer debt free, I plan on working on establishing a fully funded emergency fund. I do have about $6000 at 0% interest to pay back, but that is to a person and not an institution.

Now that my credit card debt is gone, I am in a much better financial situation and I can sleep better at night. So, my immediate goal will be to get rid of that last $6000 as quickly as possible. Although there’s no time limit to pay that money back, my goal is to pay that down by the end of October! Wish me luck.

Finally, as I re-evaluate my financial situation, I will be increasing the contribution limit to my dividend portfolio shortly!!! So, stay tuned for that announcement.

Conclusion

We can’t predict what the market is going to do. All we can do is make our best decisions with the information that we have.

To me, investing in crypto currencies (even the more stable bitcoins) felt more like gambling than it did investing. Unlike my dividend portfolio, I can’t say I truly understood the cryptocurrency markets or any of the coins that I invested in. By no means am I knocking the cryptocurrency market. In fact, I will continue to buy bitcoins in the future. But, this will always be the smallest part of my portfolio, in part because it’s the riskiest.

For now, I will sleep better at night knowing that my credit card debt is gone, and I am unlikely to get back into credit card debt anytime soon.

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