Life is mostly froth and bubble,
Two things stand like stone.
Kindness in another's trouble,
Courage in your own.
- Adam Lindsay Gordon
This is my 3rd update.
First is here – second is here.
Warning that this will be a long one. If you don’t like reading about crypto then here’s your fair warning to leave.
Some major changes in May – I was planning to cash out some ether from July but did mention last time that “If things get extra frothy..” I would sell. Well I’m sure many people try to avoid hearing about cryptocurrency but you would have had to try extra hard this month. Despite the large falls in prices this wasn’t the catalyst for my decision – as it turns out the price correction and my sell decision just happened to bump into each other.
Why did I sell? I think the main reason I was holding was the tax benefits of selling next year, especially the medicare levy surcharge – but at 1.5% this started to seem insignificant given the % changes happening on a daily/hourly/15min interval. Bitcoin had definitely lost some steam and from previous experience I felt a pullback was coming for ether.
My wife and I had a discussion about when/why to cash out – last time I cashed out (2017) it was because the cashed out amount meant we could buy a house that fit our forever home requirements while still having some ether remaining. Because it was for a goal and the goal was achieved, even though it would have meant more money selling later it didn’t really matter psychologically. The goal this time was enough to both retire living a ‘normal’ lifestyle. Normal to us (we think) is about 70k/year. This amount means we’re not splashing cash willy-nilly, buying the top range everything, new car every 5 years, dinner out every night, cleaner, holiday home, all the gadgets – but enough that we can live fulfilling lives without worrying about every expenditure.
So we decided once ether hit the point where after-tax we would have enough money invested to meet this requirement, while still holding some ether if the price continued to appreciate, and enough cash to cover upcoming large expenses, we would meet our goal and should sell.
This goal amount was 2M (1.8M in equities, 200k cash) which meant ether would need to be about $3900/eth (USD – equal to about $5000/ethAUD). I also wanted to wait until my previous purchase had been at least a year.
So on the 12th May these conditions were met and I was ready to sell, I was busy that day and didn’t want to rush the process so I decided I’d sell the next day – I had an appointment in the morning but would be home by about 9am and had cleared my schedule. The 13th became easily one of the top 5 stressful days of my life. (skip to the next ---- part if you don't want to read about this)
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I get home around 9am and the price is $4200USD/eth. It’s not at its all-time high ($4379 on binance, $4362 on CMC) which was only the day before but comfortably above the goal of $3900. Now I need to do a number of things to cash out – at this point my ether is locked in a CDP – a kind of smart contract where I used the ether to get a loan in DAI (a stablecoin) and used the DAI to buy more ether (technically wETH or wrapped ether). Unwinding this would take a little while and I needed to use my hardware wallet to do it. I usually use my hardware wallet in conjunction with metamask (a browser extension) – any transaction I have to physically approve on the hardware wallet so it’s quite safe. At times there can be slight issues when interacting with smart contracts but usually it’s fine. I start the process and within 15min the price has dropped over $140/eth (so for the amount I want to cash out this is about 75kAUD) I can’t connect to the smart contract and another 15 mins passes – down another 130k WTF?! It’s now below the goal cash out amount and rapidly falling – the day before I had spoken with BTCMarkets about arranging an OTC trade so I could sell a large amount at once (there would be some liquidity/slippage issues trying to sell 1.5-2M + their usual cash out amount is 50k/day and I didn’t want to be transferring funds out every day for over a month).
Around 10AM it had fallen below $3500/eth – so about $750/eth in an hour or nearly 400k less for me than when I opened my laptop. The thought did cross my mind that I was just a puppet in some cosmic absurdity; I was in an almost dreamlike state where the closer I got to my goal the more pushback the dream reality threw at me. I didn’t want to sell below my goal, but then again only a couple of months ago my goal had been a price above $2688AUD so the thought that by the end of the day this could also fail and the uncertainty of what was causing such rapid price changes (even for crypto this was eventful) I still wanted to cash out when I could. I just wanted it done.
I was finally able to access and close my CDP - transferred my ether to my BTC Markets wallet, contacted their OTC team (via email - they have no support number) and told them I was ready to trade ASAP (they told me the day prior they would provide a quote when ready which would be valid for 2 minutes or so). Something about the speed at which I wanted this done and the amount it was for obviously spooked them because suddenly they wanted more information. Can you provide another photo of your ID back and front … then Can you provide us more information about the source of these funds? …
As you can imagine the delay was killing me – 1 hour in my world could cost me another $400,000 – or in FIRE terms $16,000 a year forever. It would be another FOUR HOURS before it was sorted. I couldn’t eat, every minute felt like 10, the OTC market was only open until 4pm so after a couple of hours I thought fuck it - better transfer to a different exchange and sell there instead – but their limits to transfer out for crypto was like 100k/day so I was fucked. At 15:53 the email came through that my account was fine and I could trade – here was the number of my personal contact who I could call between 8am-4pm .. I didn’t even finish reading the email I was dialling the number. Miraculously by this point it had gone back up to about $4000USD/eth – so in some ways I was lucky it wasn’t sorted sooner, or hadn’t been processed straight away. The guy introduces himself and talks a bit about the process – I’m not really listening as I’m watching the charts in real-time literally calculating the change every 5 seconds – from what I had researched in Australia the spread for an OTC transfer at that amount was between 0.5-2.5%. The guy was like so if you want I can send you a quote now or we can wait until 9am tomorrow – I can’t even imagine the awful, sleepless night I would have had if I decided to wait. It’s one thing to hold, I’ve been holding these coins for 5 years and prices swing all the time, but it’s another thing entirely when you have decided you want to sell and the price is moving and there are external forces preventing you from selling. So they sent me a quote via email that was valid for 2 mins - the price at the time in AUD was about $5200 and they said they could do it for $5100/eth so I said LOCK IT IN EDDIE! (actually I said - “Hi Marc I'm happy with that price $5100/eth”)
Phew!
For reference I was selling 300eth so it was a $1,530,000 trade. I won’t get into it but the other 106weth I wanted to sell it was actually easier/more cost efficient to sell it for DAI so at the same time I sent my ether to BTCM I had converted the weth to DAI and had it sitting in my Coinjar account. As DAI is a stablecoin it doesn’t fluctuate so I locked in my capital gains basically at the point I swapped it which was something like $3786USD/eth then over the next week or so sold the DAI for AUD and transferred it 100k at a time to my bank account. All in all I started with 506eth and a 20,000DAI debt and got $2,046,916 in my bank account and have (about) 100eth remaining – along the way were some fees and transfer costs – this day was particularly high to trade and I used extra gas to speed up the transfers and make sure they’d go through. Turns out the event that triggered the price fall at exactly the time I was trying to sell was Elon Musk’s tweet about Tesla no longer accepting Bitcoin.
Now I’m not sure how to feel about BTC Markets. I’m probably only fine with it all now because in the end the trade came through at an okay time for me – had it been the next morning at 9am the price would have been a lot worse. I should also point out I used them to cash out over 1M in 2017 and my bank account details hadn’t changed, my personal address had, but even the wallet address was the same, so I should be seen as a pretty low risk customer. That said it took like 2 months for my wife to get her super paid into our SMSF so getting it sorted on the same day is probably relatively normal – I’m sure it was also an unusually busy day for them. The funds were available to transfer out into my bank account the next day too – the whole amount at once- so there was no faffing about there.
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Now that we’ve reached our goal we are both going to retire. I’m already on leave and I’m going to use up my LSL before quitting (should last until November I’m not entirely sure right now). My wife has already given notice. Ideally she’d work a couple of extra months into the next financial year for the tax benefits but knowing she doesn’t have to work she’s mentally checked out so I don’t blame her. She's also more likely to be able to return to work if circumstances force it as she's generally more skilled, capable and personable than I am. I’m expecting the tax to be about 500k – I’m going to sell all my shares that are at a loss before the end of the year so exact tax isn’t certain yet – I figure the loss is best used now rather than in the future, plus it will give me the opportunity to start my retirement with a simpler longer-term portfolio. I have thought about having this in a trust setup but running the numbers I’m not convinced the extra administration is worth it.
As I enter my May details into my spreadsheet the ether price is $2378 ($3104 AUD) so in this limited sense I timed it well but by July I may be wishing I waited – but I met my goal so for me the time was right to sell.
In non-crypto updates my shares decreased by $26,643, Super is up $6,163, and PPoR is up $28,000. Total NW is $4,522,932 but again this is before tax and the big house stuff coming up soon.
I didn’t expect my FIRE journey to reach this point so soon and so suddenly – there’s certainly some jubilation but also much apprehension, like any new life stage I suppose.
Step by step
up a summer mountain -
suddenly: the sea. - Issa
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