I think the really difficult part might be figuring out when to take it off the table. For example, let's say bitcoin goes up 10x. Then do you decide to sell, because it might crash back down the next week? But what if you miss out on another huge increase by selling?

Yeah, this is the dilemma, but can't beat yourself up too much over it. I mined my first bitcoin in February 2011 just out of interest in this cool experiment, not expecting it to go anywhere. I've always had a bit of btc in reserve but every time there's a big jump the impulse is "Better sell out of this silly bubble while I can". People who imagine that they'd have $50M today neglect that they'd most likely have had a similar reaction when it was $20, $100, $500, and so on, and it's unlikely they would've held a substantial portion until it hit $20k.

I think the part that's hard is that there is a stickiness to hype. Hype starts as baseless hype, but the belief and interest of others is frequently enough to sustain a company or project that has nothing of actual benefit to offer. This makes it hard to dismiss hype-fueled bubbles entirely. There's a circular effect somewhere here that converts the initial baseline hype into value just by the sheer force of will of "true believers".

This applies not only to bitcoin/litecoin, but also companies, software, and all sorts of other things. Generating hype, goodwill, and other mostly-positive forms of human attention is inarguably more valuable to a project or venture's long-term lifecycle than providing actual objective value. Get enough attention or interest on something and any objective value that may potentially exist is liable to materialize, at least in part.

You have essentially described what economists call positive feedback. Positive feedback loops are self-fulfilling.

https://en.wikipedia.org/wiki/Positive_feedback#In_economics

Sell half after it doubles, then hold the rest until you need the money. Selling half returns your initial investment; what remains is pure profit and you can't lose money.

This is precisely what I did, so now I have a guaranteed net profit. Yes my potential earnings are lower but it feels good to be out of the group of potential "losers" in what looks to be a zero-sum game.

Economics and innovation are two of the least zero-sum things I can think of.

I think this is easier said than done.

You most likely need to wait until it's close to 3 X the value you bought it because you'll need to pay short-term taxes after you sell it.

And once that happens, why sell half of it, vs all of it? 3 times the current value is a LOT of money and that usually takes at least 8-10 years in the equity market. Now that it happens, you're cashing out just to recoup your costs? Cash out everything, or cash out nothing and let it all ride until it's an even larger amount.

It's a standard share trade strategy.

The net cost is 0 - cash in = cash out. And taxation is zero because your profit is (at the time) 0.

It also means you can do something else with your original investment.

If it goes up 100x - cash out whenever. If it goes down to 0 - you have lost nothing at all apart from some time.

why is your profit 0?

you buy 2 at $5k it goes up to 10k and sell 1.

profit is current value - cost basis

10k - 5k = 5k profit that will be taxed

> why is your profit 0?

Because the 5k in the market is not a realized gain

> I think this is easier said than done.

Agreed

> And once that happens, why sell half of it, vs all of it? 3 times the current value is a LOT of money and that usually takes at least 8-10 years in the equity market. Now that it happens, you're cashing out just to recoup your costs? Cash out everything, or cash out nothing and let it all ride until it's an even larger amount.

I agree "just recouping your costs" is not really exciting by itself. The idea is that you think it might go much higher, but - crucially - you're not sure. It's just about reducing your exposure to risk at the cost of some upside potential. It all depends on your risk appetite.

>you can't lose money.

This is a little fallacious because it assumes that the value of your money (Dollars or something?) won't continue to lose value against until it becomes worthless paper. This has happened in recent history e.g. Weimar Germany and is happening right now e.g. Venezuela.

At the end of the day, the rationality comes from a comparison of one currency against another. Just converting back from the currency you started with doesn't mean you "can't lose".

Can confirm. Most crypto millionaires also lost "millions".

Or sell 1/n after price increases by n, for whatever n fits your risk/reward preferences.

> what remains is pure profit and you can't lose money.

Except to inflation ;). But adjust for inflation and selling enough to cover that gets you back the initial investment and also you don't lose money.

Exactly this. People should ask around for advice all the paper-millionaires from the 1999-2000 era. Lots of paper millionaires were made, most didn't materialize.