#BitcoinBackedLoan: How to "Borrow Time" and Keep Your Core Asset
The purpose of borrowing isn't to magnify returns, but to "prolong life".
👉 You're borrowing time so your core assets can continue to grow, preventing a forced sale when you need cash.
Your #BTC is your "core asset."
You believe in its long-term growth. But when you need fiat cash (for a down payment, business, or taxes), you face two choices:
- Sell BTC: Lock in gains, forfeit future upside, and trigger a capital gains tax event.
- Collateralize BTC: Get fiat liquidity while retaining your BTC position.
Choosing Option 2 is how you "borrow time."
We can use an interest-only loan model for wealth management, explicitly for "living expenses, not for reinvestment/speculation":
- Interest-Only Focus: Reduces short-term repayment pressure, freeing up cash flow for essential needs or taxes.
- Avoid Speculation: Use the borrowed fiat for stable, non-speculative purposes (like the "living expenses"). Don't stack risk on top of a volatile asset.
⚠️ Crucial Risk Warning:
Due to Bitcoin's extreme volatility, these loans require "over-collateralization" and carry a "liquidation risk."
If the LTV (Loan-to-Value) ratio gets too high, you may face a margin call (you need to add more BTC) or your collateral will be automatically sold to cover the loan.
Core Rule: Maintain a healthy #LTV and keep fiat liquidity ready to manage sudden price drops.
In Summary:
The ultimate goal of a Bitcoin-backed loan is to gain liquidity without selling your core asset.
It's a tool to "buy time" for your holdings, allowing you to access necessary cash flow while still benefiting from the potential long-term upside of holding #Bitcoin.
