Bitcoin Family says they lost $ 1 million in value this year

The “Bitcoin family” has lost more than $ 1 million in bitcoin investment since the world’s most popular digital currency peaked at around $ 69,000 in November 2021 – but patriarch Didi Taihuttu is as bullish as ever.

“I buy bitcoin daily,” Taihuttu told CNBC by phone from a beach in Lagos, Portugal. “For me, the lesson I learned is the last two cycles – when the whole world scares and when everyone thinks bitcoin will crash, I slowly zoom out and I buy bitcoin.”

In 2017, Taihuttu, his wife and three daughters liquidated everything they owned, exchanging a 2,500-square-foot house and virtually all of their earthly possessions for bitcoin and a life on the road. This was back when the price of bitcoin was around $ 900. Bitcoin is currently trading around $ 19,200.

Along the way, Taihuttu has left its bitcoin position and then bought in again, trading its coins at convenient times.

“It’s bitcoin life,” he said.

Taihuttu tells CNBC that he sold about 15% of the family’s total bitcoin holdings when the price fell to the $ 55,000 price level in late November.

“$ 55,000 for me was the confirmation that we would go lower,” Taihuttu continued.

Extreme volatility is the price of doing business in the digital asset market. Over the past decade, bitcoin has experienced two long periods of depressed prices before picking up again. In the previous crypto winter of 2018, bitcoin lost more than 80% of its value before hitting back, eventually rising to an all-time high last year.

“There’s still one aspect of crypto that we’re waiting to see if another shoe will drop, if another device will fail, if the credit cascade will continue,” Matt Hougan, chief investment officer at Bitwise Asset Management, said in an interview.

“If your time frame is a week, or a month, or even a quarter, I think there’s still significant volatility. If you have a time horizon measured this year, then yes, this is a great opportunity to think about going into the market. ” Hougan continued.

Taihuttu – which studies crypto market price charts and follows popular indicators such as Mayer multiple – believe that in the current price cycle, bitcoin will bottom out somewhere between $ 15,000 to $ 20,000, before bouncing up to over $ 140,000 by 2025. And right now, according to Taihuttu, it is “the ultimate buying moment”.

His investment strategy has worked quite well so far. Taihuttu tells CNBC that his portfolio has grown by more than 2000% in the last six years.

“Slowly, people will understand that being in bitcoin and HODLing is more profitable than always trying to capture the altcoin that will go thousands of times,” Taihuttu said.

For the past six years, the Dutch family of five has traveled the world. But after spending time in 40 countries, they decided to take root in Portugal – which is one of the last places in Europe with 0% tax on bitcoin.

To stay “emotionally grounded” when faced with this level of volatility, the Dutch family of five follows what they call the 70/30 rule.

At any given time, Taihuttus keeps 70% of its bitcoin holdings in cold storage (which is inaccessible without physically getting it), and the other 30% in a hot wallet, which means the coins are connected to the internet, either through a mobile phone wallet or an online exchange.

Of the 30% of crypto stashes, some are held in bitcoin, and the rest are in a mix of US dollar-denominated stack coins including tether, USDC and dai. This type of “hot” storage gives owners relatively easy access to their tokens so they can access and use crypto. The trade-off for simplicity is potential exposure for bad actors.

“Every time our capital increases, I make sure 70% is in the cold store, so then I can not touch it from there,” Taihuttu explained.

Taihuttu has done its utmost to make its cold wallets particularly difficult to access.

Most of the family’s cryptocurrencies are in secret vaults on four different continents, including two hiding places in Europe, another two in Asia, one in South America and a sixth in Australia. None of the sites are underground or on a remote island, but the family told CNBC that the crypto stores are hidden in various ways and in a variety of places, from rental apartments and friends’ homes to self-storage sites.

Taihuttus also hides the seed phrases (that is, a unique grouping of 12 to 24 words used to access digital assets) on the same continent as their corresponding hardware wallet, but in different countries. Seed sentences are different from the private keys used to access crypto wallets – but it is crucial that users keep track of both.

Cold storage often refers to crypto that has been moved to wallets whose private keys – the passwords that allow the crypto to be moved out of the wallet – are not stored on Internet-connected computers, so that hackers can not hack into the computer and steal the private keys , “said Philip Gradwell, chief economist at Chainalysis, a blockchain data firm.

In addition to the benefits of basic cyber hygiene and protecting its symbols from bad actors, Taihuttu has also done everything to protect his holdings from himself.

“I think if I had those hardware wallets with me, I might be more emotionally involved, and maybe when I see bitcoin fall, I would take my hardware wallet and start selling or buying,” he said.

That said, the Dutch father of five says he is never far from either the general ledger or the seed phrases.

“I can always fly cheap with RyanAir or AirAsia. In three hours I’ll be there.”

Of the bitcoin that the Taihuttu have thrown away around the world, almost all of their coins are non-KYC’ed – meaning they are not subject to the “Know Your Customer” rules required by centralized exchanges to prevent them from being used to money laundering or engaging in other illegal activity. This means that no one, including governments or friends, knows exactly how much the Bitcoin family has stored.

To do this, Taihuttu has bought much of its bitcoin over-the-counter.

“There are many forums where you can still buy bitcoin with cash,” Taihuttu told CNBC.

“Each country has its own desk. There is one in Mexico that earns up to a million dollars a day in cash,” Taihuttu continued, although he noted that you may have to buy at a premium when you buy OTC.