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borrowing against bitcoin isn’t for everyone, and it’s not a blanket recommendation. it’s about optionality and having this service available to bitcoiners, which now have over $2T of wealth. if you believe bitcoin will appreciate over the loan term and you have a productive use for the capital you’re getting, it can be a strategic move. otherwise, holding and compounding bitcoin may be the better play. it’s not about forcing a high time preference, it’s about maximizing optionality without have to sell the asset.

🐢 7mo ago

Even if the bitcoin depreciates over the loan term(which 12mo term is more likely than say, 48 or 60mo terms), the liquidity access can still be crucial for individuals who can beat the interest rate, as it’s all paid back in fiat, not bitcoin. The bitcoin just sits as collateral.

Say I wanted to build a house, but my primary asset is bitcoin, and therefor i don’t qualify for a construction loan. I could fund the building of my house using a bitcoin backed loan, then mortgage the house to pay off that loan.

Construction loans are getting harder and harder to come by, as builders don’t want to take the risk and prefer cash buyers.

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Discussion

ᴛʜᴇ ᴅᴇᴀᴛʜ ᴏꜰ ᴍʟᴇᴋᴜ 7mo ago

nothing i said disagrees with your argument. i'm just saying that timing is important, bitcoin bull markets are a bad time to lend it out, you would be better selling it little at a time during those periods.

🐢 7mo ago

Better selling it? So I can pay cap gains tax and then buy it back at higher prices?

Good way to stay poor.

kc 7mo ago

Yup, a good way to have fun….

jack mallers 7mo ago

timing the market is not strike’s job. we’re not here to speculate on bitcoin’s price or advise people on when to borrow or sell. we’re here to provide tools and optionality for people to make their own decisions. if someone believes bitcoin will appreciate and wants to maintain exposure without selling, they can now choose to borrow. if they’d rather sell, that’s their call too, we can help with that. we’re not in the business of telling people what to do with their bitcoin. we just giving them options to improve bitcoin’s utility for the world

kc 7mo ago

Timing is important. It seems like you know when the bull run is coming. Will you please let me know when the bull and bears will arrive?

2 quick items to think of.

1. When you sell bitcoin you only get fiat in return.

-plus pay taxes. That is great!

2. When you take a loan on bitcoin you

-keep the original bitcoin amount just use it as collateral,

-pay a small portion of the balance and interest,

-plus get fiat to use the fiat.

-pay no taxes.

If that isn’t winning… I don’t know what is.

I guess not everyone runs their life like a business. Some run it as a consumer.

DRE 7mo ago

People can make their own decisions, we are all big boys with big boy pants.

Stop derailing the original conversation about the jewish connections with this left curve nonsense

YODL 7mo ago

I'm curious if you know what happens if there's a significant drawdown. Does one need to add more collateral to avoid partial liquidation? Guessing so, but never seen it addressed

DRE 7mo ago

Yeah typically the lender wants you to maintain a certain LTV (typically ~50%) if that goes up they will probably ask you to add more collateral and when a threshold is met and no additional collateral is added they liquidate the collateral to protect the loan

YODL 7mo ago

Thanks, thought it was strange hadn't heard it addressed. Grace periods etc., don't really know how it all works. Prob worth educating people more about that imo

DRE 7mo ago

Yeah, it’s a pretty standard practice similar to trading on margin and needing to keep the margin maintenance at a certain level to avoid getting a margin call.

I imagine the user interface walks you through this when you take out a loan

2Pac 7mo ago

Yes margin call at 70% LTV with 24 hrs to bring collateral up to 60% and 80% causes liquidation. It’s a bad idea.

2Pac 7mo ago

https://strike.me/faq/what-are-margin-calls-and-liquidations/

YODL 7mo ago

24 hours is pretty tight, but at least terms are clear and maybe that's standard. Thanks for linking

2Pac 7mo ago

That fact that bitcoin regularly drops 30% even in a bull market almost guarantees a margin call.