Important: How To Size A Position You Can Actually Hold
The right size is not the size that maximizes your return. It is the size that lets you survive the moment when everyone around you is selling.
I want to talk about something this week that almost nobody in this industry talks about correctly.
Bitcoin briefly touched $61,351 overnight, putting the asset within striking distance of the February $60,000 floor for the third time in four months. The seven-day decline is now closing in on 18%. Ether is below $1,700. The altcoin complex is bleeding. Everyone in your timeline is yelling about Saylor or Iran or ETF outflows or whatever the headline of the hour happens to be, and the broader conversation has been so dominated by what's moving the price that almost nobody is asking the much more important question.
Are you sized correctly for this?
Not “is your thesis right.” Not “is bitcoin still going to a million.” Not “did you read the right essay this morning.” The question is simpler than any of that, and it is the only question that actually matters when the market is doing what it has been doing this week. Are you holding a position you can actually hold? Not in theory. Not in the fantasy version of yourself that you imagined when you bought it. Are you holding the position you currently have, at the price it’s currently at, in the moment you’re currently in.
If the answer is no, nothing else I write today is going to help you. And if the answer is yes, you don’t need anyone in your timeline to tell you what to do this week.
OKX Will Pay Out Bitcoin To World Cup Predictors
OKX just launched The Beautiful Game, a free campaign where you pick match winners across the World Cup to earn points toward a share of a Bitcoin prize pool. It runs from June 3 to July 20 and covers 190+ markets, from the group stage to the Final, plus Golden Boot and tournament winner. You earn points by checking in daily, picking outcomes, and referring friends, and the higher you climb the leaderboard, the larger your potential share when the tournament ends.
The whole thing runs inside the OKX app with no deposit, wallet, or bridging required, and it’s points-based, so no real funds are involved. Rewards are credited directly to your OKX account at the end, no claim needed. If you follow soccer, it’s a free way to put your read on the tournament to work.
Position sizing is the single most underrated skill in crypto investing, and the reason it is underrated is that everyone wants to talk about thesis and nobody wants to talk about size. Thesis is fun. Thesis lets you sound smart at parties. Thesis is what gets retweeted. Size is boring. Size is private. Size is the actual reason most of the people you watched get rich in the last cycle gave it all back, and it is the actual reason most of the people who are quietly compounding through this cycle are going to come out the other side okay.
Let me say something the maximalist crowd is going to hate.
Position size matters more than thesis.
Two investors can have the exact same thesis. Bitcoin is going to a million. Self-custody. Long-term. Conviction. Same words, same framework, same belief. One of them puts 10% of their net worth into bitcoin. The other one puts 80%. Both are sitting at $66,000 today, watching their position bleed. The 10% investor goes to work, has dinner with their family, sleeps, and adds on weakness next month. The 80% investor cannot sleep. They check the price every twenty minutes. They get into fights with their spouse. They make panicked posts on Twitter. By the time the bottom is in, they have either capitulated and sold or they have white-knuckled their way through a level of stress that has cost them years of their life. Same thesis. Same asset. Wildly different outcome. The only variable was size.
The thesis was never the problem. The size was always the problem.
Here is what almost everyone gets wrong about position sizing, and I include myself in this for plenty of years before I figured it out. We size our positions based on the scenario we are fantasizing about, not the scenario we will actually have to live through. We imagine the moment of triumph. We imagine the gain. We imagine the screenshot we’ll post when the trade works. And we size accordingly, because at the moment we are putting the position on we are emotionally regulated and the only thing we are thinking about is the upside.
What we don’t do, and what we should do every single time, is imagine the moment of maximum pain. The moment when the position is down 60%, the macro story has gotten worse, your friends are calling you to ask if you’re okay, your spouse is asking questions that imply they were never as on board with the thesis as they pretended to be, the news cycle is uniformly negative, and three of the smartest people you follow in this space have just publicly capitulated. Now ask yourself what you do in that moment. Not what you should do. Not what you tell yourself you would do. What you would actually, mechanically, physically do at three in the morning when you woke up sweating and pulled up the chart.
If you would sell, you are sized wrong. Right now. Today. Before that moment ever arrives.
The single most important sentence I can write in this newsletter all year is this. The right position size is the size you can hold through the worst moment you can imagine, not the best moment you can imagine. Because in any asset that delivers serious long-term returns, you are guaranteed to live through the worst moment you can imagine at some point. That is the deal. The asset’s volatility is the price of admission. If the size doesn’t survive the volatility, the position doesn’t survive the cycle, and the thesis was never tested because you weren’t around for the test.
Let me give you the framework I actually use, and I will warn you in advance that it sounds too simple. The simplicity is the point.
Step one. Imagine your position is down 60% from where you put it on. Not 30%. Not 40%. Sixty. Crypto delivers 60% drawdowns regularly. Bitcoin has done it in every cycle. Altcoins do it more often than that. The 60% number is not a worst-case scenario. It is a base-case scenario over any multi-year holding period.
Step two. In that scenario, ask yourself what you would do. Be honest. Most people answer this question with the version of themselves they wish they were, not the version of themselves they actually are. The honest answer is whatever you would actually do, on the day, in the moment, with whatever else is going on in your life at the time.
Step three. If the honest answer is “I would sell,” you are sized too big. Reduce now, before the drawdown happens, while you can still do it from a position of strength. The right size is whatever size lets you genuinely say “I would hold” without it being aspirational.
Step four. If the honest answer is “I would buy more,” you are sized exactly right, or possibly too small. That is the only acceptable answer for a long-term position in this asset class. You should want lower prices. You should be praying for lower prices. If lower prices fill you with dread instead of opportunity, your size is wrong.
Step five. Re-run this exercise every six months and every time the price moves more than 30% in either direction, because position sizing is not a one-time decision. It is an ongoing relationship between you and the position, and the right answer at one point in your life is not the right answer at another point. Job changes, family changes, savings changes, age changes. All of it matters. The position should grow up alongside you, not stay frozen at whatever size you put it on at when you were ten years younger and less had to lose.
That is the whole framework. There is nothing more complicated than that, and there does not need to be.
Now let me anticipate the pushback, because I have heard it for years.
Watch THE DAILY WOLF On Yahoo Finance
The maximalist crowd will tell you that real conviction means going all in. That sizing down is cope. That if you really believed in bitcoin you would put your entire net worth in it and never look at the price again. I have a lot of respect for parts of that argument and I think it works for a very specific subset of investors, the ones who have genuinely internalized that bitcoin might go to zero and they would be fine with it. Those people exist. They are rare. Most people who tell you that is who they are have not actually examined the proposition honestly, and you can tell because they are panicking right now alongside everyone else. Real maximalist conviction at full size is not common. Performative maximalist conviction at full size is everywhere, and it ends the same way every cycle, with people quietly capitulating at the worst possible moment and pretending afterward that they had sized down ahead of time.
The other pushback I hear is that I am being too conservative. That sizing for the worst-case scenario means I will miss the upside. That the people who got rich in the last cycle were sized for maximum upside, and the people who sized conservatively missed it. There is a piece of truth in that and a much bigger piece of fiction. The people who got rich in the last cycle and stayed rich were sized in a way that let them hold through the 2022 drawdown. The people who got rich in the last cycle and gave it all back were sized for maximum upside, exactly as the pushback recommends, and they got annihilated at the bottom. The survivors are not the ones who maxed out. The survivors are the ones who sized in a way that let them survive being wrong about timing for years on end. Survival is the entire game. Returns are a downstream consequence of staying alive.
Now here is the question I promised you at the start, the one that resolves everything I have just written.
If bitcoin opened tomorrow morning at $40,000, what would you do?
Take a minute with it. Don’t answer too quickly. Don’t give me the answer you want to give. Give me the honest answer.
If your honest answer is “I would buy more,” congratulations, your size is right. You are positioned for a long-term thesis that has actually integrated the volatility, and you have the dry powder to take advantage of dislocations rather than being a victim of them. Hold the line.
If your honest answer is “I would sell” or “I would panic” or “I would have to talk to my spouse about what we just lost,” your size is wrong. Today. Reduce now. Not because the thesis is wrong, but because you are not currently positioned to survive being right. The thesis is only useful if you are around to see it play out. Right-sizing is not a retreat from conviction. It is the operational requirement for having conviction at all.
The reason I am writing this on a Thursday in the middle of a bad week and not on a Sunday morning during a bull market is that this question only delivers honest answers when the market is hurting. When the market is rallying, everyone tells themselves they would buy at lower prices. When the market is actually at lower prices, half of those people are selling. The gap between what we say we would do and what we actually do is the gap that destroys most retail investors in this asset class, and the only way to close the gap is to size for the version of yourself that shows up under duress, not the version of yourself that shows up in a fantasy.
Be honest with yourself about which version of yourself is going to be at the keyboard on the day the price hits its low. Size for that person. Not the person you wish you were.
That is the whole game.
BitMine Just Cloned Saylor’s STRC Playbook On Ethereum
Bitmine Immersion to issue $300M preferred stock to fund ETH & buyback plan
Tom Lee’s BitMine announced a $300 million 9.50% Series A Perpetual Preferred (BMNP) yesterday, paying weekly dividends and funding ETH accumulation and buybacks. It is the Strategy STRC playbook, ported to Ethereum, with a higher dividend frequency. The capital structure war between BTC and ETH treasury companies just got real.
Kraken Just Opened Real IPO Access To Retail Through Tokenized Equities
Kraken Unlocks US-Listed IPO Access for Retail Crypto Users
Payward announced yesterday that Kraken customers and xStocks Alliance partners will soon be able to register interest in US IPOs and receive tokenized shares at the offering price, not the open-market price. With SpaceX, Anthropic, and OpenAI all queued, crypto rails just became the retail access mechanism for the largest IPO wave in history.
Stripe, Visa And Mastercard Are Building A Joint Stablecoin Platform. Coinbase Is Watching
CoinDesk reported yesterday that the three biggest names in card payments are jointly launching a stablecoin platform soon, with Coinbase considering participation. Stripe bought Bridge for $1.1B in 2024, Mastercard bought BVNK this year. The CLARITY Act is stuck. The rails are getting built anyway.
Bitcoin CRASHES To $65K As Wall Street Flees Crypto For SpaceX!
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Phenomenal insight. Thank you 🙏
Very good! I still remember when you where on crypto banter telling Ran to re-balance his portfolio when Luna was ripping 🤯 hard lessons