Discussion
Lol no please bro, loan at 12% APY, you don't want to pay taxes on your bitcoin bro
Cmon bro margin calls and liquidations are fun
You know that feeling when you want to reply your opinion but then on the last word you say to yourself: nah, donât wanna argue with weirdos?
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I've heard of solutions to leverage your bitcoin (which effectively frees up bitcoin for spending while keeping the returns, like a loan) all done natively on bitcoin. Could be an alternate way to do loans. Demand that instead maybe if you're against dollar loans? Just sayin'. Lnmarkets is a thing that exists, I hear tell.
Donât leverage your Bitcoin unless you are ready to lose it. Use it for savings, build those savings up, spend/sell some if you need to in order to afford life, and utilize fiat loans with much better terms for larger purchases (home, car, etc) if you need to. The current Bitcoin loan offerings suck majorly.
I currently don't have access to any borrowing with good terms, so I'll just keep working, saving and spending less than I get in.
That's highly speculative claim.
I took a bitcoin backed loan (to pay taxes lol) at 8% (50% LTV).
Fiat, non-backed loan was something like 15%.
I could sell bitcoin, giving gov. 15% and miss current bull run.
Why not set up a payment plan with the tax office? They are typically at a comparable interest rate to your 8% and you donât have to leverage your bitcoin that way. There are so many options in almost every situation to explore BEFORE jumping to taking a loan with shit terms against your sats.
we can't do that in my country. The terms are horrible. Worse then loan sharks (and daily interest).
and I did my research, this was least shittiest option.
LNMarkets is futures and options not a fiat loan. Yes there is âborrowingâ with leverage but very different than borrowing against bitcoin to buy a car or some shit.
Yeah but technically it still would free up bitcoin as if it was loaned to you, with the risk of liquidation of the collateral you place (or stop loss targets) and the work needed to manage that risk. It's like how investors use LEAPS to get exposure to a stock over a year or more without actually putting all of their collateral into the equivalent amount of equity for the same price fluctuation. That frees up more collateral to be used anywhere else because of the fungibility of money. So technically, it's the same, just with highly adjustable risk and risk management requirements.
Any form of loan involves speculation, like an investment. That's why corn is telling me to be humble and don't use loans.
Of course I'm invested in Strategy anyway so... lol! But it's a small part of my overall wealth.
Kind of I guess but collateral difference is huge ie strike you need 2x + collateral to secure fiat. Futures you can chose youâre leverage but lowest being 2x which would be .5 collateral going all the way up to 100x or .01 collateral. KYC vs Non. Etc. so itâs not exactly the same product itâs quite different.
Different product indeed, but some of the function is identical.
It's like a car vs a tank. Kind of the same thing, has a lot of the same parts and functions, but kind of isn't the same thing.
why?
Because you will probably end up losing bitcoin.
In that scenario, you aren't really losing anything though. You got the cash, at a higher rate. No different than selling it at a higher amount. if you blew it on coke and strippers, that's an issue.
But if you loan instead of sell it, you wouldn't have the Bitcoin anyways, plus you would have had the taxes on the sale.
So for 12% interest, you save in many cases 30% in taxes.
We need to stop acting like if someone needs cash now that there is another option between a loan and selling the Bitcoin.
*sell it instead of loan
You donât have to take a loan against your bitcoin to get a loan. And when your sats get liquidated to cover a loan you incur a taxable event. Playing with fire.
I don't disagree, but one doesn't need to get liquidated unless they a)don't pay back the cash, or b) doesn't add more bitcoin
And remember, they would only liquidated on an amount. If the price drops and an event is triggered, it's not like all the collateral is now gone, only those amounts needed for the LTv to come back in line.
It's a product for whales, large holders, and those who have plenty to re add margin. No reason to sell and pay the taxes for them for a new business, commercial property or home, a kids college costs with easy terms, and so forth.
It isn't for 99% of bitcoiners likely.
People also need to realize that while drops happen, the last short term huge price drop was March 2020, covid. It's not like they happen every few weeks.
People have been acting like there are 40-50% drops all the time.
My fear is that 99% of the customers using it are going to be plebs attempting to larp as âmini Saylorsâ and then they get rekt đ
Ha. Could be.
With current limits of 75k though. That's a few hundred k in Bitcoin. Now, if they drop to 25k, 10k, 1k.... Totally different users. Yikes.
I don't see myself ever using it, but I absolutely see the value in being able to access massive amounts of dollars in 1 business day. No credit checks, underwriting, and all the other nonsense. Just post Bitcoin, get dollars. That's huge, especially in non US markets.
I've done a ton of house flipping, rentals and wholesaling in my day, short term hard money is not cheap. These days you are talking 12-20% for a 90-180 day loan.
Enter Strike... Faster, easier, there if you need or want it.
I like options in life. A heloc is a nightmare. Personal loans the same.
For whatever my opinion is worth. đ
Since the conference they dropped the minimum loan to $10K. Gotta put up at least 2x in sats to begin with for collateral.
Those are decent numbers. Anything less than 10k could have issues. 50% margin is decent.
But honestly, I could care less of some gets rekt on a loan and blows it. Not my concern.
Also, at the point your sats get liquidated to cover the loan, it is at a lower market price so you are losing more sats. You can justify it all you want. Maybe itâs your only option, and if so then do what you have to do to live life. But most people using these loan products will end up with less sats than if they just sold/spent what they had to in order to pay for life and then kept stacking.