Because you will probably end up losing bitcoin.
Discussion
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 don’t 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 “mini Saylors” and then they get rekt 😂
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. 😂
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 it’s 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.
