Once you get into the habit of stacking sats, it becomes a focal part of your life. You’re constantly looking for ways to skimp and change your lifestyle to acquire more Bitcoin. We all have different financial situations, and we have to leverage them as best we can. Ideally, you do not want to put today at risk, but you also provide for tomorrow. The smaller your disposable income, the fewer options you have, and you must play it close to the chest.
Bitcoin is a savings technology, but the technology works best when you have something left over to save. If you’re an ordinary pleb like me who does not have any assets to their name like a home or access to much credit, your cash balance is the only weapon you have to accumulate satoshis.
All I have is the cash I’ve saved up over the years and the cash I can keep after paying for all my living expenses. As inflation creeps into my pocket, it doesn’t leave me with much each month, and it’s getting even smaller as my fiat mining operations try to salvage the losses.
Crafting out my stack.
I realise I am living on borrowed time, and Bitcoin is the only way to get that time back. I could just set all my savings to auto stack and call it a day, but being the crafty human I am, I like to play games with myself, and hopefully, I can squeeze out a few extra satoshis in the prices.
Now, first of all, I believe in the power of compounding returns; Bitcoin’s CAGR has been over %200 for many years now and even if that halves over the next decade, it’s still an excellent return. I am not about to look that gift horse in the mouth.
So I keep my dollar cost averaging running each month and make sure I have the cash to fund that operation.
Playing the opportunity cost game.
Long term, I know I cannot hold onto my cash balance if I am to acquire the maximum amount of satoshis from the remaining purchasing power. I try to offset this by dollar-cost averaging every day. Some of the cash I keep on hand, hoping I can deploy it more effectively by catching certain inconsistencies in the market.
As much as I want to go all-in sometimes, I still don’t want to be left without any ammo should there be some short term or medium term buying opportunities.
Using limit orders to catch market movements.
The Bitcoin price moves every day, and that’s only looking at the aggregate data from various high-volume exchanges. Since I purchased mine on a local exchange, where liquidity isn’t that great, we tend to find moments when the price dislodges from the aggregate price.
As spot price sellers are pretty agnostic to liquidity and are only out to dump, they can put in orders that temporarily suppress the price. Usually, an exchanges bots will try to gobble up those orders, but if you’re lucky and set limit orders in the suitable ranges, you can be the one to benefit from those temporary drops.
However, it would help if you had cash on hand to do it; I always ensure I put 10 – 20% of my DCA set aside for limit orders each month. If my limit order rangers aren’t filled, I reset them to a new range for the new month.
Opportunities outside direct stacking.
I am a firm believer in stacking, but there could be times where having cash could help your cause instead of locking it into Bitcoin.
- You could come across a good deal on something you can buy and flip and then secure the profit in Bitcoin.
- You could take advantage of exchanges looking for liquidity and offering you promotional terms.
- You could take advantage of exchanges offering you better interest rates on your cash or your liquid Bitcoin.
- You could look at purchasing miners if their profitability would be a better bet for you.
Keeping dry powder for significant market corrections.
I also keep an emergy kitty on hand and try to replenish some of it each month in case of significant drops in price. None of us knows when the next FUD piece will spook the market, as we saw with the China mining ban that took down the price by 50%. Market shocks like this can see many traders and really put a damper on the price for a short period, and these chances are once in a lifetime opportunities.
Having cash on hand allows you to be that buyer of last resort and pick up those satoshis for an absolute steal. I know I am always grateful, and it goes a long way to building my stack and buying back some of the years I’ve lost through tax and inflation.
Reduce your need to tap into your Bitcoin.
Having some cash on hand also protects you from having to tap into your Bitcoin funds early. Your cash savings can help pay for any expenses you may have and provide a buffer so you never need to consider tapping into your Bitcoin.
The current monetisation process of Bitcoin means you risk massive opportunity costs by spending it early and the longer you can hold on to your stack, the fewer Bitcoin you need to run your life.
Bitcoin is only going to continue to become harder to acquire so if you can stock pile while competition is low and sit on it for as long as possible, that’s how you get the most out of the returns it provides.
The monetary marathon.
Bitcoin is not a 100-metre dash. It’s the longest marathon you’ll ever run, and like a marathon runner, you need to know how best to conserve your energy and remain consistent. You don’t want to wind yourself too early racing ahead only to lose ground later in the race, and this is something I’ve been thinking about a lot.
Like all of you, my goal is more satoshis; I realise once I secure a price per sat in the timechain. I will not let it go anytime soon, so bringing down the cost per satoshi I acquire is my goal.
I will hopefully buy at bottoms, like I know I will buy at the tops. My goal is only to ensure more of my capital is deployed when prices bottom out temporarily.
What is your tactic for stacking sats?
Like all Bitcoiners, we’re always open to learning new things and better strategies and would love to hear from you. How do you plan your monthly stacking? Do you keep cash on hand, or do you clear the house every month? Let us know in the comments below.