Yes, and no.
If you have a btc backed loan, your collateral (btc) accrue interest, because you never sold. And if btc raises more, than your interest, you won.
Actually this is how the rich lives.
Buy, borrow, die.
They buy investments, and take up loan, that costs less, then their gains.
But you have to be careful, not to get liquidated.
Also there is a type of loan, that has no monthly payment.
Would you not accrue more Bitcoin in the long term if you did not get a BTC backed loan but instead sold your Bitcoin to eliminate debt and bought more Bitcoin with the freed up funds?
Yes, your stack takes a hit in the short term but over time you acquire more than you would have since a BTC backed loan does not increase the amount of bitcoin you have.
I understand your point of appreciation but physically stacking with freed up money no longer going to debt may earn you more Bitcoin in the long run.
1. If you sell your btc to repay your loan, you will have less bitcoin, and more cash month by month to buy btc.
2. If you take a loan with btc as collateral to pay back your debt, you will have all btc, and still more cash month by month to buy btc, if you take a repay at maturity loan (no monthly payments.)
In theory, in option 2, you could roll over your loans infinitely, so you never have to sell your btc for fiat. But in this scenario, you will have to have a bigger stack, so you can post more collateral if btc hits bottom. So this scenario highly depends on your stack size to begin with. With too small stack, I would not do it. Also questionable if you can roll over infinitely.
