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Checkbook control crypto retirement accounts

man opening his arms wide open on snow covered cliff with view of mountains during daytime

TL;DR: Fund an AltoIRA Checkbook+ LLC, and buy, trade, or sell bitcoin and other cryptoassets within a tax advantaged retirement account. Reduce your taxable income AND eliminate capital gains taxes!

I am so excited I’m almost giddy.

Background: I’ve been investing in equities since the early 2000’s and had employer 401Ks that I rolled over into a IRA brokerage account in 2017, a few years after I started getting involved in crypto. In 2019 I started buying Grayscale Bitcoin Trust ($GBTC) as a way to gain exposure to bitcoin. It currently makes up the majority of my total portfolio, about forty percent, and another forty percent are in crypto mining and exchange positions, and Grayscale’s Ethereum Trust. I’ve been looking for a way to reduce exposure to Grayscale’s products which trade at a premium, and put funds in BTC directly, while retaining my tax advantaged status. One of the benefits of trading within these accounts is that I can enter and exit a position without having to pay taxes on any gains.

Alto came to my attention while reading a post about the DeFi Pulse index. Alto was just kinda dropped in there as a side note, and after after a bit of back and forth with the CEO, and I went ahead and scheduled a call with one of his associates, James O’Brien.

I was a bit deflated going into the call, because the fees that I were told given were a bit off-putting, one percent a year as a maintenance fee, plus one point five percent per trade. That might be ok for someone starting out, but there’s no way I would go for that. James explained that the crypto product that Alto offers is basically a vehicle for Coinbase custody, which is geared at institutional investors. The fees are what Coinbase charges, and covers insurance on the funds. Of course, you’re limited to what tokens Coinbase offers, and you can’t move anything off to a private wallet. Fair enough, but it’s not for me.

So what really got me excited was when O’Brien told me about the checkbook LLC which is a self-directed IRA plan. You have checkbook control over your funds.

“Checkbook Control” is the term used when a self-directed IRA owner has complete signing authority over an account that gives access to his/her retirement funds. This strategy is achieved through the establishment of a Self-Directed IRA LLC. Since the LLC established is a business entity, it can establish a checking account. The LLC is funded by using retirement assets like an IRA which then funds the LLC’s checking account. This offers greater investment freedom, allowing you the IRA holder to meet your investing goals and manage your assets with ease.

What is Checkbook Control?

These type of entities can be used to purchase practically any asset, including real estate or cryptocurrencies. And the cost that Alto charges to do the necessary paperwork is only $750 dollars, that’s five hundred to setup the LLC and necessary documents, plus two fifty a year for what I assume are the required tax documents and so forth. That’s much better. I can use whatever exchange I want, park the tokens in a cold wallet, liquidity pool or lending provider, and sell them without a care in the world. My keys, my coins.

The only real downside is that crypto assets cannot be transferred directly into the IRA. Only cash goes in. So if one has existing crypto holding that one wants to make into a tax-deductible contribution, you’ll have to liquidate to fiat, transfer the funds into the IRA’s cash account, then to your crypto on-ramp to purchase the asset again. This could lead to some slippage if one doesn’t have cash on hand, but that can probably be optimized through some dollar cost averaging process.

There’s another downside to a crypto IRA, and that’s the fact that IRA contribution limits are currently capped at $6000 a year. There are similar vehicles in the 401K space that have much higher limits. I found one company, called Solo401K, that provides this service. I chatted with one of the associates over the web. These plans are available to self-employed individuals, contract employees, but not individuals who are employed by others. The limits are closer to thirty thousand a year, and there’s other advantages, like being able to take a personal loan out against the account. Since I’m not a contract employee or self-employed, the 401K plan isn’t an option for me. Solo401K is by Naber Group, which also has an IRA option, but their setup fee is twice as much as Alto, and they charge an extra hundred a year in fees.

I went ahead and setup my Alto account this morning, the process took about five minutes. The main thing you need to think about is what type of IRA you want to open, whether traditional, Roth, or, if you’re a business owner, a SEP IRA. Other than that, there’s several forms to fill out, and it appears that it will take up to two weeks for the paperwork to come back on the LLC, which is created in Arizona.

https://remnote-user-data.s3.amazonaws.com/cCmChWQ7Swh11-Jdo5ho8C7V8-oJYDz9KbPA3dhgB-HwpYTYdfaLnFdjsb1VMb2ivic31xlYf6k7fdnWIhl7dCvJvez7M-Sjo0E8wGDlWxepqvazPOlLD1uFLXJccRC-.png
Best part of the LLC contract.

Once this is all done, and I’ve opened new bank and exchange accounts, I will begin liquidating my IRA positions in GBTC, rolling over the cash, and buying spot BTC. I’ll probably do the same with my ETHE holdings as well. I’ll also need to liquidate enough of my existing crypto holdings to max my 2020 annual contribution before April 15th, unless I can come up with that kind of cash in the meantime. It might be a wash with capital gains on any crypto sales, but I’ll figure that out.

I’ll also be converting my employment to contractor status. I’ve already had a talk with the bossman, and I should be able to make that happen before the end of the year, and switch my IRA to a SEP or 401k to take advantage of the higher contribution limits. (Alto plans on releasing their 401k product sometime later this year.

Lastly, a warning. There are rules about how you handle funds in these checkbook accounts that you have to be aware of, like no commingling of funds, no double dealing, and nothing that enriches yourself or other family members, like buying real estate or businesses that you or they have a stake in. The IRS also prohibits purchases of collectibles, which may be a problem with NFTs, but other than that, you have complete freedom to buy any token, using lending platforms and leverage, or ape into whatever yield farm you want. As long as all the gains stay within the confines of the LLC, you are golden.

If you’re interested in opening a Checkbook+ IRA, use my referral link to get $75 off the first year’s fees.

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The little degen that could

I’ve been thinking a lot about self-directed IRAs and solo 401Ks today, trying to scheme some way for me to take advantage of these instruments to preserve some of my crypto gains. I wrote a bit about IRAs yesterday, but the solo 401K seems like it might be a better option. Basically the advantage is that the solo 401K has a higher annual contribution limit, somewhere northward of $50 thou compared to $6500 for an IRA. Also, it seems that you can take out a loan against it, which you can’t do with an IRA. The interest, which has to be the prime rate plus one percent, gets paid to yourself, which isn’t really a downside to me.

So basically I could take crypto that I already have and deposit it into either of these account and consider it a deduction on my taxable income, then take a loan against that deposit, stake it in BlockFi or elsewhere and earn a higher interest rate than I’m paying on the loan. This strategy would net about four thousand dollars.

It’s not great, and assumes that BlockFi doesn’t go under, but coverage on the deposits could be purchased for about 2.5% of the capital amount. Not great from a risk/reward standpoint, that’s for sure.

Speaking of RR, I’ve already pulled the remainder of my wBTC holdings out of the Yearn vault in anticipation of putting it into the BadgerDAO LP pools, at 400%. It’s going to be a short-term play, very high risk, but 400% APY can’t be ignored. I’m spending a good deal of time in the Discord and looking over the docs to figure out exactly what’s going on. They’re aiming to be nothing less than the one-stop shop for everything related to Bitcoin on Ethereum, and what I’ve seen so far has been very promising. And it seems like the closest thing to going back in time to get involved with Yearn or Sushiswap in the first few weeks. The interest rate is already dropping, and there’s a threat that the token price might collapse when the airdrop for the DIGG product happens, so I’m keeping a close eye on it and will be prepared to exit early if need be. Right now I’m just waiting on gas to drop so I can enter into the pool.

I’ve also become aware of a token called ibETH, or interest bearing Ethereum, from a project called AlphaFinance. I’m not sure how it works yet, but there’s a large amount held by a DeFi whale, and it’s yielding 20% returns. That’s better than what I was getting in my Yearn bUSD vault, which I already exchanged for ETH, so it seems like it might be a good place to park it. As usual, I’ll probably buy some first then figure out how the hell it works after. Alpha has a mind-numbing 43 liquidity pools which seem to range between 40-150% interest.

So I’m going to wait for gas to drop, then stake an insane amount of capital into Badger and pray that I can make it through the next month without a contract failure or rug-pull, and then I have two calls scheduled with people from the IRA and 401K firms. If all goes well, I may have discovered a line of business to be explored by the newly formed Skunkwerks project that is forming. We may have a possible niche, helping people open these accounts so they can take care of these DeFi opportunities. As more people come onboard with Bitcoin — like my neighbor — we’ll stay on the bleeding edge of yield and help guide people through varying levels of risk and leverage in the space.

It might just be the perfect opportunity, if I can earn enough income for my wife to provide a steady income for myself, I may be able to help others along as well. Not that I’ll need it for myself, of course, but because I want to bring as many people along with me as possible.

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Let’s build something

Exploring fintech business ideas

So today was a pretty good day. I got woke up very early and managed to get a workout in while I listened to Willy Woo make the case for $100k BTC. It was very convincing, despite the fact that they recorded it friday before the dump from $42K. There was a bit of recovery in the markets which made back about half of what I lost on the Monday dump, but beyond that, I did little work altogether and got to spend some extra time with the girls today. They’ve been really starving for my attention lately and I was glad to be able to fill that cup. I taught them how to play checkers, and I let them tag team wrestle me on the the trampoline. Beating me up seems to be their favorite activity.

I’m keeping an close eye on my new investment in BadgerDAO. It’s netting about fifty dollars a day, and I’ve probably got a few weeks while the insane APY continues, so I’ll continue to monitor and scale in further as I assess the risk/reward. I pulled all my USDC out of the Yearn vault last night and bought ETH, as I figure we’re at the bottom and likely to hit all time highs and price discovery very soon. I had a minor mistake calculating gas costs which almost cost me; by the time all was said and done I paid a hundred dollars for the withdrawal. I only made a hundred dollars interest in the vault over the last two or three months, and by the time you calculate the entry fees, I ended up net negative.

At the risk of repeating myself, with DeFi it seems like it’s better to ape in first and figure it out later. A few months ago, I told my friends that Yield Farming wasn’t worth the trouble unless you were operating with more than a thousand dollars. That’s when ETH was trading at three hundred dollars. Now that we’re at a grand, that number has increased as well. I think my original estimation was off by a lot, and I’m wondering if the current figure isn’t closer to ten thou. It seems apparent that if ETH continues to climb to all time highs, that small players (minnows) are going to be priced out of participating. Transferring Eth or ERC tokens will be expensive in real dollar terms.

This may be mitigated somewhat by scaling advancements as ETH2 gets rolled out, but it seems we’re going to be dealing with some very high network congestion on ETH during the next few months, and it remains to be seen whether Cosmos, Polkadot, or Avalanche will be able to fill the need in time.

Some of you may know that the majority of my active investments and assets are in my IRA. I have a significant portion in Grayscale products and crypto-adjacent equities as opposed to BTC directly. It would be nice to have access to actual cryptoassets in my IRA, but I’ve yet to find a decent offering that didn’t have what seems to be outrageous fees.

One percent on trades on top of a one percent annual management fee seems outrageous on it’s face. To his credit, the CEO, Eric Satz, did respond to address the concerns, and I have a meeting scheduled with one of the associates later this week to discuss some of the options. Apparently the end goal is to have unrestricted access to DeFi through IRA dollars, but they currently have insurance and custody expenses that they have to deal with. More to come.

Something else I ran across to day was this post from a Bombay entrepreneur about a new crypto-bank that they’re spinning up. I had a chat and signed up to take a look. I really like the way they present it when you go to the app.

Letting people choose their risk level in this way is really striking. And as if the universe wasn’t trying to send me a signal already…

So to synthesize the problem a bit more explicitly: the DeFi industry is just at the early stages of really taking off. This success is going to price most smaller participants out of the markets, leaving most of the gains to those who are already starting with large capital investments. I’m thinking there needs to be a way to pool assets and distribute the costs in such a way that it’s more efficient for small lenders. Personally, I’ve been having problems keeping track of my own DeFi holdings, an issue which is complicated by the fact that I’m using funds earmarked for several family members. There has to be a better way, in fact, Andre Cronje, the lead developer of Yearn Finance, created the vault system for this very reason.

So can we build a ‘self-driving bank’ or DAO that makes easy to pool resources from lots of small players, and takes steps to minimize gas costs even further? Or one that can bring in large IRA funds from the less crypto-savvy investors and use those to bring in these 20%+ yields. I think it is possible, but recognize there are going to be numerous regulatory hurdles. That’s not my forte, but when one considers the opportunity in non-profit and municipal treasuries, it’s clear that there is a very large opportunity in this space.

It’s clear to me that I’ve found an issue that is near and dear to me, and I’m going to be spending some time brainstorming with others and figuring out how I can make this transition into a role in fintech this year. Whether that means becoming involved with an existing project or bringing one together from the ground up remains to be seen.

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Crypto Developer Report

I managed to read the entire report today and took notes on which projects were mentioned. I had to look up several projects that I hadn’t heard of before, to see where they were traded, and I wound up opening some small positions on everything that was listed on Gemini: $COMP, $AAVE, $BAL, $MKR, and $FIL. I even threw in $CRV for good measure, and opened a much larger position in $YFI. I’m still waiting on my $SNX order to fill. There are a couple more tokens in the list that are one Kraken that I plan on taking up, such as $DOT, $XTZ, $ATOM, $ALGO, $BAL, $KEEP, and $GNO. Kraken has minimum bid limits, and I don’t have the liquidity to open positions in all of them, so I’ll have to wait. There are other projects that are listed on Binance and Bittrex that I may queue up at some point, but I’m staying off of there for now.

One takeaway from the developer report is that $EOS is actually losing active developers. It may be time to drop my bags in that. I’ve been holding this position since September of 2017, and am up over 300%. It’s not a huge tax liability, but I’m not sure if I want to wait until Jan 1 to sell so I can delay the tax bill or not. The question that’s biting at me is timing. I could spread the proceeds from the EOS bag around pretty good. BTC-wise, EOS hasn’t been doing too good, even though it’s USD value has been doing OK. There’s also the question of all these airdrops that I’ve gotten in my wallet that I have no idea what to do with. I’m going to need to do some research before I decide what to do.

As far as fiat goes, I’m being very aggressive right now, and aren’t keeping any more cash than I need to than is needed for the following month. I’m increasing my weekly set-aside to about 22% off my take home pay, and it’s getting sent straight to the exchange. The rest gets set for the next bill, and it gets paid as soon as the total is ready. Rent for January just got sent to the joint account, and I don’t even have any credit card bills due until the end of next month. I’m sitting real pretty right now, and feeling pretty good.

The big question right now of course is what’s going to happen with BTC. I’ve made a couple small buys during this dip, but it’s anyone’s guess whether we consolidate or go further down near $15,000 before the eventual moon mission begins. I’m considering exiting the Yearn BUSD vault and putting those proceeds straight into the WBTC one, but the stablecoin vault is earning 20% APR right now. If the price has any more huge pullbacks I’ll probably layer some margin bids on the levels in the following chart, and will probably go all in with the main cash reserves if we get in the $16,500-15,900.

The other token I’m considering dumping is my IDEX position. Running my staking node isn’t profitable, even with the increased rewards, and the token price has fallen so much since the Binance listing. I’m not really confident in the project given the success of the rest of DeFi and other DEX projects, so I’m really conflicted about this one. I’m really not trying to dump until the new year though, as I’ve done really well with this one. I hate to sell here though. I really feel bad about not selling in September at $0.07 a token. Now it’s just 0.03. Sigh.

I feel like I’ve been staring at charts all day. Time to go relax.

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Reading list

I finished a couple of books last night, Yural Navari’s Sapiens, and Kurt Vonneguts Player Piano. There’s also a couple of reports out on the crypto landscape that I’m reading over.

Sapiens didn’t feel all that groundbreaking to me, to be honest. I think that it covered a lot of ground that I was already aware of but as a book for general audiences, I think it’s great. I’ve read Navari’s Twenty Questions before, and I’ve listened to him speak, so I like what he has to say. Writing the entire history of mankind in a five-hundred page book is quite a feat, and I can see why it’s so popular. So much of it has seeped into the collective consciousness since it came out in 2014, much of the Silicon Valley techbro culture has absorbed it. Finishing it was a slog though, it took me several weeks.

That said, I did order the first volume of the graphic novel as a Christmas gift for Elder, if she likes it I suppose I’ll be buying the next four volumes for her when it comes out. Best to get her off on the right foot, I suppose.

I’ll add Homo Deus to my reading list next, after I finish The Fourth Turning. There was a lot of talk about the singularity near the end of Sapiens, which is one of those subject near and dear to my heart, so I’m looking forward to see what Navaria has to say about that.

On the other end of the spectrum is Player Piano, which I found very interesting. I had read Slaughterhouse Five right before this one, and it is downright crazy how prescient Player Piano is. It seems less science fiction than some alternate reality where transistors were never invented. In the story, much of the populace is out of work due to automation. Society is divided into the manager class, responsible for designing and running the factories which produce everything, and the common people, the now non-working class, who are relegated either to either menial public works projects or the army. IQ and aptitude tests determine one’s station in life, and most people are on a sort of universal basic income, where all needs are determined by the machines, down to the type of fiction that gets written and published. The protagonist of the story, one of these managers, becomes disillusioned and involved in a conspiracy to rebel against the machine and return man to a more honorable place among the dignity of work.

I was quite floored by the portrayal in this book. It’s hard to tell just how revolutionary Vonnegut’s ideas were at the time, it seems that he was just making an extrapolation based off of watching an automated miller make airplane props at a GE plant during WWII. Obviously we’re not using punch cards anymore, but it seems like he was spot on in many ways.

Delphi Digital has their Bitcoin Outlook for December 2020 out today. It looks at a market and on chain metrics, trying to get a cyclical sense of where BTC is headed in the coming months. The short of it is that if history repeats itself, we should see a new ATH followed by a large pullback before parabolic runs during the end of next year. Six figures, easy.

And last but not least, Messari Crypto has their Crypto Theses for 2021 out. It’s a whopping 130-page document on everything from bitcoin to ethereum, defi to NFTs. I just started reading though the opening pages on this one, but it’s very, very, well researched. There’s a lot to take in here, and this is a great resource.

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Kraken margin trading calculator

Determining position size, leverage, and liquidation levels

If we are indeed at the start of a bitcoin bull run, then it is going to get progressively harder to accumulate a full BTC. Raising the FIAT needed to buy one outright is beyond my means without taking some credit risk. Trading alts is another to do this, but I’m not willing to risk much of the BTC that I already have on alts. Instead I’ve decided to see what I can do with a small amount of fait and some margin trading. So I opened an account on Kraken.

US residents don’t have many options when it comes to leveraged trading. Kraken is one of the few, and the one that seemed most accessible to me. Getting verified was simple enough, but I was a bit shocked to find that they don’t allow ACH transfers from bank accounts, only wire. Alas. I was able to use stablecoins to transfer from my preferred exchange, as well as some BTC I had earmarked in a trading wallet, as well as some ETH I had mined.

With these meager funds, I made a small swing trade on spot. I’ll admit that I didn’t know much about leverage, but I did know that there was a call level and a liquidation level. For the life of me though, I couldn’t find a way to calculate this. Kraken’s documentation shows that they have a profit and loss / liquidation calculator, but it’s on the futures site, and not available to me. I’m not sure this is an oversight, or a way for them to get over on noobs.

I spent an hour or two last night trying to calculate these numbers myself. With a few examples and some algebra, I was able to put together a spreadsheet that allows me to plan my entry and stops, and validate that they are well outside of liquidation range.

Using an example from Kraken’s documentation: Using $5000 in equity to open a $10,000 position with 5x leverage results in a $2000 margin level. The margin ratio on the account is (5000/2000) x 100 = 250%. A ratio of one hundred percent put us in danger of liquidation. Kraken can margin call at around 80% (the exact percentage depends on some obtuse factor), and the liquidation process starts at 40%. But how to figure this out.

Kraken’s example gives us a hint. If the account takes a paper loss of $3500, this puts the equity at $1500 (5000-3500), and the margin level is now 1500/2000 = 75%. So we know have enough information to write it out as an equation. 

margin rate = (equity - original position price - current position value) / margin amount

What we really want, though, is to estimate the current position value. Using a bit of algebra we can isolate it as such: 

current position value = (margin rate * margin amount) - equity + position cost

Now we can substitute the call and liquidation rates in our spreadsheet to determine the current position value, further breaking it down by market price and position size.

In order to use the spreadsheet, fill out your equity size, entry and stop loss. The risk amount is set to two percent, change as you like. If the position size is more than five times your equity, OVERLEVERAGE will return true, which means that the parameters you’ve entered are so conservative that you won’t come close to the full risk amount. You can lower your stop loss to find the sweet spot.

In our example, we have $10,000 in equity, and are going to enter a position at $10,000, with a stop loss of $9900. This will allow us to open a $20,000 position, which we will be able to open using $4000 of margin (collateral) at 5x.

As you can see, the spot price will have to drop to $7000 before our margin level falls to 100%: (14,000 position value + 6,000 equity remaining = original position size of $20,000.) Since our stop loss is well, well above this level, we shouldn’t have to worry about getting called at 80% or liquidated at 40%.

Hopefully this spreadsheet is helpful, and please, please use risk management before you take these trades. If you’re new to leverage, as I am, I recommend you read CryptoCred’s Comprehensive Guide to Position Size and Leverage.

Enjoy.

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Bitcoin legacy

I’ve been slacking off the past couple days. Two days without posting isn’t something I want to turn into a habit, so here I am, even on days when I don’t have much to say.

I was doing pretty good this week, going to bed on time, getting up early, I even worked out for the first time in weeks. All it took was a couple drinks Thursday afternoon and everything is off track again.

We did have a campfires Thursday and Friday night, first over at our house, then yesterday at the neighbor’s, roasting hot dogs and making smores. Afterward I had to take Elder to Urgent Care for what appears to be nothing more than dehydration. Wasted two hours plus dealing with that. Oh well.

My mom came into town Thursday. We haven’t seen her since the lockdown. She brought lunch and presents for the kids, as well as some family “heirlooms” that she didn’t have room for. One was a box of Christmas Village houses, and the other were some collectible plates that my grandfather bought forty years ago.

It seems like every female member of my family was into these Christmas Villages growing up. Every winter the tops of the kitchen cabinets would get decorated with fake snow and out would come the houses. My grandmother and aunts, and my mom all had them. Missus and her family never got into them, so she was disappointed when I told my mom I’d take them. I couldn’t say no, I guess.

The plates though, oh, these plates. They’re a series of ceramic plates portraying Mother Goose rhymes. They’re by a company called Roco, and the artist is named John McClelland. My grandfather got scammed out of them big time. I looked through the paperwork that came with them, and man did he get took. He saved the solicitations, talking up the “limited” series as a hot collectible item. Plates from the first run in 1978 were going for $150 each, and there’s no way that he wanted to miss out on the rest run. And he bought what looks like is the whole set, some ten plates that went for $25 in 1981. That’s about $75 each in today’s dollars.

I checked eBay, and individual plates were going for as little as $5 each.

If my grandfather had simply invested that $250 in the S&P index, back in 1981, it would be worth almost six grand.

It should have been obvious, looking at the fact that the serial numbers on the plates have five figures. These things weren’t collectable items, they were mass produced.

Now I don’t know if my grandfather took any pleasure in the plates themselves, or if he thought he was making a sound investment in them. It looks like he started buying them the year I was born, and he passed away many years ago, so I never talked to him about them. When my mom asked me if I would take them, I didn’t want to say “no” without looking at them. I don’t have anything left of my grandfather, save a stained glass lamp that he made, so I didn’t want to throw this out without looking at it.

Now that I’ve seen them though…

I’m tempted to stuff them in a dark corner of my attic and deal with them later, but I can’t do it. They will have to go. I should just take the whole lot and stick it in the car now and bring it straight down to the thrift store. My grandfather’s name and address is all over the boxes, I don’t know if I need to bother marking them out or not. Probably not.

I haven’t even looked at the Christmas Villages. Not sure if I will.

When my mom left for her trip, she took my old bassinet with me. She had given it to us for our daughter, but it wasn’t that practical and we never wound up using it much. I asked her if she wanted me to get rid of it, but she wound up taking it with her. She wanted to save it so that my girls could use it for their kids. I asked her if she was really going to keep it for another twenty or thirty years, especially since she had told me earlier that she was moving to Portugal in a few years. In fact, the whole reason she was bringing me the plates and villages was because she had sold her mountain cabin and was trying to downsize into one home. It didn’t make any sense.

Missus said that her family aren’t hoarders like mine are, but I’m not sure if that’s quite what it is. I’m not sure if it’s some sort of legacy or heirlooms that they’re trying to leave behind. But it’s got to go.

Missus and I have been embracing minimalism. We’re starting to reject the consumerism and accumulation of wealth that we were brainwashed into, and try to get to the point where we can be free, or freer at lease. There’s a point, coming soon I think, where we’ll be able to maintain our lifestyle and only need to work for a few hours a day. If bitcoin fulfils it’s promise like I think it will, we’ll be looking at a point in the next year or two that we’ll have enough wealth to be independent. To get there, we’ve got to make lots of cuts. Not just the second car, but just cleaning out the clutter in the house.

Nothing comes in now without something going out. That’s the idea, at least. Christmas is a hard test, since I’ve got a foyer full of gifts from relatives, and have more tucked away in closets and under the tree. I’ve promised Missus that I’ll finish ordering for my overseas relatives as soon as I get done writing.

I was tempted to buy a three pack of Opendimes and load them up with some BTC to give as gifts, but ultimately decided it was too expensive. I still think it would make a good gift though, but they’re too expensive to be a casual gift. As a legacy or heirloom though, I can’t think of anything that would be more appropriate.

My grandfather also bought me a treasury bond when I was born, I can’t recall if it was twenty five or one hundred dollars. When I was thirteen I used it to open my first bank account, and cashed it in. I’ve been thinking a lot about bitcoin as legacy, not just my own kids but their heirs as well. If we’re truly moving into the next phase of Bitcoin’s evolution, then it would be wise not to ever sell what I’ve accumulated. It could be generational wealth.

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Roller coaster day

Last night was a full moon, Missus caught a picture of it off the front porch as it peeked out from behind a cloud before we went to bed. I knew I was going to have trouble sleeping, I was caught up, and sober, a knew my mind was going to give me a hard time without the drink. I took a melatonin, even though I knew I was probably going to wake up too early and not be able to fall back asleep, and that’s exactly what happened.

When I woke at five the moon had traversed all the way around the house, and was shining brightly in the bedroom window. I tried in vain to go back to sleep, but couldn’t manage fifteen or twenty minutes before I was awake again, and finally got out of bed. Might as well make the best out of it, I thought. I was overdue for a workout, and needed to work my bad knee to keep it in place.

Listened to a couple podcasts while working out. Finished up George Dyson on Team Human. The intro was more interesting to me, a tribute to neuroscientist Mark Filippi, who had passed away. Filippi had a theory that the phases of the moon influences human emotions, based on the phase. There are four neurotransmitters that cycle with the moon. The full moon is when serotonin is dominant, and supposedly gives us more energy and creativity. The waning moon, the last quarter, is the dopamine phase, linked to pleasure and enjoyment. The new moon is the noradrenaline, which makes us defensive, and is when people are more fearful and irritable. As the moon returns in the first quarter, we’re supposedly more receptive to other people (acetlycholine), and we have energy, but not much focus. Good for inspiration, but not detail-work.

That’s the theory anyways. Rushkoff, the host of Team Human, says that he tries to schedule his work around these lunar cycles, writing during certain weeks and editing during others. I’m not saying I buy it, but maybe I’ll start paying attention to it and see if I notice anything.

After that I started an episode of The Breakdown, this one a reading of The Complete Case for $100K Bitcoin. As I was listening, my phone beeped with a Trading View alert. We had just hit an ATH on Coinbase! I checked the TV chat long enough to see all the self-congratulation, and posted “can I quit my job now!” and finished my workout. By the time I had finished the workout and checked the price again, it had already dumped a thousand dollars.

I meditated, hung out with the girls and got ready for work. Premarket was down, looks the markets were going to take back some of yesterday’s historic gains. But as the morning went on, the dip had been bought back up a couple hundred short of the ATH, and by the time the market was open I was up a few grand.

The rest of the day was more whipsaws of volatility. I was nearly at breakeven at one point and finally stopped looking at Twitter and Trading View around lunch, after I’d dispensed with my day job duties. I needed to get some work done on Ether Auction. I stopped to look at my balance at the end of the day, and was up back to where we had started. Huh.

It’s really incredible. To think that in six months I’ve doubled my retirement account, and thought it would take me another two decades to save up as much. I had been resigned to working for my entire life, but now it seems that financial independence is within reach, and in the next few years. Remarkable.

Bitcoin to $100K seems like it’s going to be a cakewalk by 2024. Three hundred seems much more likely, at least for a peak. And I know it’s way too early to look beyond that, but it seems likely that five hundred or one million in the next five to ten years will happen. And beyond that, if I’m still around, who knows. Bitcoin will change the world.

Lord knows it’s already changed my life.

There’s one more thing I’ll share, a piece called Bitcoin Astronomy, about how bitcoin as a global reserve currency will become a driver for human expansion into space. It’s far out.

Even though we hit the Coinbase ATH today, and I truly consider all records broken, my bottle of Glenfiddich 15 still remains in the cupboard. I think celebration is a bit premature. I’m going to wait for us to breach the level and close above it, not just a wick. That moment will really signal that we are on our way. One more touch ought to be enough to do the trick, and I’m guessing we will see it within the next week.

Fingers crossed.

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All time high?

$BTC set new records on many exchanges today, following a huge pump as the weekend drew to a close. This followed a drawdown just before Thanksgiving which made lots of people question whether we’d see new highs before the end of the year. $ETH participated in the pump as well, breaching $600 again.

My IRA holdings saw an absolute massive gain today, over 16%, close to three months salary. It’s amazing.

While CT was going nuts about “ATH”, I’m holding off on the celebrations because it didn’t hit on either Coinbase or Gemini. So my celebratory bottle of Glenfiddich will stay corked for now.

Work continues on the Ether Auction subgraph. I kept running into a bug using Hardhat, verified it using Ganache, and got a tip from someone on the Graph Protocol Discord. The bug was fixed in the most recent version of Hardhat, and I was able to get the subgraph working after I bumped the version in my repo.

I’ve now got the bare minimum I need to start putting together the front end. Step one, auction details, with the pot amount, start and end time. I need to figure out how to show the bids, and have the bid events update the auction entity. I may need to go back and update the contract to add a deposit pot event so that I have something to start with. Right now I’m using the auction_start event, which is triggered on the first bid, but that’s not going to work for the actual deployment. I want the functions to be available from the web front end.

So there’s lots of work to do.

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Thanksgiving dip

Last night, Coinbase CEO Brian Armstrong sent out this Tweetstorm about possibly AML/KYC regulations that might be rushed out by outgoing Treasury secretary Steve Mnuchin. It’s worth a full read.

https://twitter.com/brian_armstrong/status/1331744884856741888

It seems like others have been expecting or anticipating this. Laura Shin just released an episode of Unchained earlier this month: Everything You Need to Know About the Looming Battle Over Privacy in Crypto

$BTC is dumping hard on the news, currently down under $17k.

I may have made a few sub-optimal mistakes.

First I cancelled my $GBTC sell order on Monday. The price blew by it on Wednesday and I felt like a genius, but then bottomed out yesterday. My worry was that any dip might be too brief for me to avoid settlement rules on my IRA account, which is prohibited from engaging in day-trading activities. If the price doesn’t recover before tomorrow, though, I’m looking at a five-digit down day, which won’t be fun.

I also make a small move with the last bit of fiat in my exchange account that was typical. Two days ago i had set a buy order based on a trend line I charted, at $18,450. Last night, before things got really crazy, I replaced the order with the new trend line, at $18,591. The price dipped, my order hit, and came back up. I felt good.

Then, a few hours later, the McDonalds memes started popping up on my Twitter feed, and I saw the price feed. Whomp whomp.

I’m seriously tempted to buy the dip, either by swapping my Yearn BUSD vault over to the WBTC one, but I’m just going to chill. Sticking to the plan is best here. When I get caught up in the market is when I make the worst mistakes. So I’m going to sit on my hands.

It is Thanksgiving, after all, so I’m going to spend the morning puttering around the house. We’re going to my mother in law’s for dinner, and Missus siblings and family will be there. We almost cancelled, due to COVID, but we figure since her mom watches the kids every Friday that we’re not taking that much of a risk. I’m conflicted.

I’m going to close out all of my TradingView and Twitter tabs, and try and try to be present with the family as best I can. I’ll try to remember how lucky we all are that no one has gotten sick and that we’ve got good jobs, a roof over our heads, and food on our tables. This year has actually been really good for us, all things considered, and I just want to stay humble and sober through today’s meal.

Finally, I really am thankful for the opportunity that Bitcoin, Ethereum and other projects has given me. It’s crazy to think how far things have progressed since I got involved four years ago. It’s funny for me to recall that I had set a goal to be working full-time in the crypto space by Thanksgiving 2018. We’re a bit behind schedule, but I’m okay with that. I work from home, I’ve got power and freedom at my job, and it provides just enough income for me to pay the bills and be comfortable financially.

And in spite of COVID, I’ve grown closer to my family, and managed to save enough of a financial cushion that I don’t have to worry about losing my job.

And thanks, Satoshi, whoever you are. Thanks to you I’ve stopped worrying about accumulating money to have things, and less concerned with being rich, and am instead focused on building wealth as a way to escape the trap of employment. My girls will have an opportunity to forge their own path to freedom, to know money as a tool for freedom, so that they can pursue their best lives.

Happy Thanksgiving.