get a loan and reinvest it

[thecodebear]

Hello. I see different platform like nexo, blockifi, etc... that can borrow you crypto or stablecoin. I'm here to ask if you have a strategy for example you borrow btc with an interest rate of 6% and then you use it on defi with 8% APR. Thanks for helpful.

I recently put some Bitcoin on Blockfi to get 6% from them lending it out. I briefly thought about using my bitcoin to get a loan through them instead of loaning out my bitcoin on the platform (note that you can't do both, if you put your btc as collateral to get a loan they don't loan out your btc for interest). But then I realized their loans are for 12 months so you have to pay the principal back in a year, and the interest rate you pay is around 11%. It's very high! It's not 6%, 6% is the interest you get if you DON'T take out a loan but let them loan out your bitcoin. Also for some reason when I put my btc on their platform they didn't even allow me to take out a loan, not sure why. Personally my plan was to take out the loan to buy polkadot cuz that returns 12%, but when I realized the interest payments are 11% it just wasn't worth the risk involved, cuz if BTC outperformed DOT by even just a little bit the math wouldn't work.

Due to the very high interest rate you'll pay, the volatility of crypto, the fact that defi rates could change, and the fact that you have to pay off the loan in a year, I'd consider this to be quite risky. If you want to put your bitcoin to work it's better to just get the 6% interest you get by leaving your btc with them so they can loan it out. I just put 1.57 BTC on their platform, making 6% a year that's like 0.1 BTC a year. Even if I didn't let that compound, within a few years that'll be making me a lot of money from just a little bit of my Bitcoin and completely passive income.

[1714479976]

1714479976

[thecodebear]

Just a general story about taking out loans to buy crypto. In late 2017 I took out a $35,000 loan to buy bitcoin when it was in the $6000s. Great timing as market tripled in the next 6 weeks, so if I had sold near the top it would have been a killer move by me. Of course I didn't and finally got totally out of the loan in summer of 2019 when I wanted to be out of debt. I think all together I maybe came out roughly even on the loan, not sure. Point is, even with great timing and a booming market, it's still risky just from human error (greed) on top of the risks associated with volatility and whatnot.

[Wilhelm]

Hello. I see different platform like nexo, blockifi, etc... that can borrow you crypto or stablecoin. I'm here to ask if you have a strategy for example you borrow btc with an interest rate of 6% and then you use it on defi with 8% APR. Thanks for helpful.

<snip>

... I just put 1.57 BTC on their platform, making 6% a year that's like 0.1 BTC a year. Even if I didn't let that compound, within a few years that'll be making me a lot of money from just a little bit of my Bitcoin and completely passive income.

.... until the platform gets hacked....

[Poker Player]

Hello. I see different platform like nexo, blockifi, etc... that can borrow you crypto or stablecoin. I'm here to ask if you have a strategy for example you borrow btc with an interest rate of 6% and then you use it on defi with 8% APR. Thanks for helpful.

<snip>

... I just put 1.57 BTC on their platform, making 6% a year that's like 0.1 BTC a year. Even if I didn't let that compound, within a few years that'll be making me a lot of money from just a little bit of my Bitcoin and completely passive income.

.... until the platform gets hacked....

I don't know why people get into these problems. Bitcoin is going to go to at least $100k this cycle (maybe quite a bit more) and will easily hit $500k to $1M next cycle. What do you want more profitability for? Just buy with the money you save and don't put your bitcoin at risk for a little more profitability.

[Wilhelm]

Hello. I see different platform like nexo, blockifi, etc... that can borrow you crypto or stablecoin. I'm here to ask if you have a strategy for example you borrow btc with an interest rate of 6% and then you use it on defi with 8% APR. Thanks for helpful.

<snip>

... I just put 1.57 BTC on their platform, making 6% a year that's like 0.1 BTC a year. Even if I didn't let that compound, within a few years that'll be making me a lot of money from just a little bit of my Bitcoin and completely passive income.

.... until the platform gets hacked....

I don't know why people get into these problems. Bitcoin is going to go to at least $100k this cycle (maybe quite a bit more) and will easily hit $500k to $1M next cycle. What do you want more profitability for? Just buy with the money you save and don't put your bitcoin at risk for a little more profitability.

+1... it’s called greed.

[The Cryptovator]

A dangerous idea so far. Borrow funds for need is fine, but take a loan and invest in DeFi would lead you to lose your funds. Very rarely there are legit projects and we can't determine exactly who is legit or fake. For me, I wouldn't take a loan for these reasons. I would agree to take a loan if you are a good trader, perhaps you may build your portfolio if you are lucky and experienced. If you lose trading as well then you are in double loss, because you have to pay capital with interest to release your collateral. So think twice before borrow funds for investment.

[dothebeats]

If you have already built businesses on your name previously, using loans to reinvest it should be no big deal. But if you don't have the experience to do such things, then I'd advise you to stay away from doing this even if on paper you'll be profiting in the long run. There are lots of investment baits that seem to be good in theory but does not always meet the numbers in actuality that it's hard to borrow money in order to get in. Perhaps just earn from your job first and start small, it'll take you somewhere if you consistently tend to it I'm sure.

[Mahanton]

Hello. I see different platform like nexo, blockifi, etc... that can borrow you crypto or stablecoin. I'm here to ask if you have a strategy for example you borrow btc with an interest rate of 6% and then you use it on defi with 8% APR. Thanks for helpful.

So trying out to sip that 2% difference in APY? No, it doesnt work that way unless if you do deal with stable things like fiat but for crypto? Imagine first the volatileness where the main
factor that would really be affecting towards your plan.Those examples given on earlier page is on spot. Swinging up prices up and down will be the deciding factor neither you would
gain profit or would basically patching up on the amount that you had lost just for you to pay the loan that you had taken.
So i would really disagree into this kind of idea which it isnt really worth the risk.

[Findingnemo]

Hello. I see different platform like nexo, blockifi, etc... that can borrow you crypto or stablecoin. I'm here to ask if you have a strategy for example you borrow btc with an interest rate of 6% and then you use it on defi with 8% APR. Thanks for helpful.

Investing on BTC with 8% interest may sounds good but you are talking about a defi which can become a scam project in any time. It is better to take fiat loan and invest it on BTC which is pretty less risky compared to your idea.

[carlfebz2]

I would rather taking up some loan and put it up on a real-life business than on putting it on a defi platforms which we dont even know on when they would be lasting out

but honestly, why would really be taking up some loan that urgently if you can really find out ways to accumulate coins if you wanted to? Dont think about APR passives because
you can eventually earn those more than with just simply holding.

On my part, i would really be avoiding any loans or some sort.

[Distinctin]

Hello. I see different platform like nexo, blockifi, etc... that can borrow you crypto or stablecoin. I'm here to ask if you have a strategy for example you borrow btc with an interest rate of 6% and then you use it on defi with 8% APR. Thanks for helpful.

I believe the 6% interest is monthly, You will loss a lot of money considering that 8% is a yearly profit meaning you will have 0.666% profit from staking monthly. Its OK to borrow BTC if the current price was oversold so that you will not suffer big loss if ever the price drops more. You can also gain profit if the price pump after you bought but this is a very risky method. I just do it whenever the price drops and my salary date is still far.

It was not monthly actually, I got corrected in my post above, APR stands for Annual Percentage Rate.

The interest is low, good for investing or trading but not for staking IMO.

[Ridwan Fauzi]

I don't think it will give you profit and you are comfortable when you hold it. Borrowing money is your burden, you have to pay it back when you have money. Whereas you hold bitcoin is a risk as well, because the volatility price is really high, you may get a huge money because its price increase but you will get lose in a few time because its price decrease.

Unless, you are an expert to trade or investing. You may have a chance to pay your loan and getting profit with that. The interest 6% is really high I guess, you have to count and wondering if it's worth it for you, your responsible is not how to pay your loan but you have to pay the interest. So, I guess it is not worth, I suggest you to work and get the money after that you can hold bitcoin.

[Johnyz]

Hello. I see different platform like nexo, blockifi, etc... that can borrow you crypto or stablecoin. I'm here to ask if you have a strategy for example you borrow btc with an interest rate of 6% and then you use it on defi with 8% APR. Thanks for helpful.

That can only works if its a good site and if you’re dealing with a good project that 8% profit in return is guaranteed on APR which I doubt. Borrowing money and reinvest it only works to those who are familiar with the market and knows what to do, I never tried to borrow on that project and reinvest it with them, maybe you can borrow real money and buy more good altcoins, this is way better for me.

[adaseb]

You need to becareful with all these DeFI smart contracts. Every week or so there is some new exploit discovered where people get all their money stolen.

If you really want to do this do it either by using Gemini Earn where you get like 7-8% per year. Or use something like a futures broker and just profit off the premium. Currently the September futures has a 12% premium so in about 12 months its about 24%.

If you got good credit you can probably get an unsecured loan for 8-10% and you would double your money. Just make sure to use 2FA. You just deposit fiat, buy on spot and short the futures.

[tygeade]

I wouldn't say no to this right away, I never really understood people who looked at loans the way some huge companies look, you do not have to do something that big, there are small loans as well. For example, taking out a 2k loan is still a loan, taking out a 10k loan is a loan as well, you do not have to take out 100k loan, get a small loan even a person that works on mcdonalds could pay, and invest it right away into something that would get you money, and you could repay the loan with your salary and keep doing that constantly.

It is a very valid method for people who can't save money, if you have to put some of your salary aside and live with the rest and save that small amount aside each month to get to 2k and fail to do that because you end spending it, getting a loan is a much better method if you ask me. This is why I am not against loans, I am against bad loans, there is a difference.

[Reid]

Why use platforms like this when it's risky?
Try using banks, that way they will have no idea where the money is going.
You decide it yourself after taking the cash. I don't recommend loans on platforms like this, there had been a lot of scams that happened back then and it won't change that easily.
Get cash, buy bitcoin, and use Bitcoin as means of buying other coins that you have a knack for.

[bitzizzix]

What you need to know is that investing is full of risks, borrowing funds to invest must be supported with confidence and expertise in investing so that it can produce results as expected, and you can also pay debts on time according to the previous agreement.
I personally don't want to do that because it's very risky if it doesn't go as expected, it's better for me to borrow funds to create a real business or business that will generate profits every month that have been conceptualized beforehand.

[Shasha80]

Don't forget to invest money that we can afford to lose, meaning that we don't use risky sources of capital. Because using borrowed money
as investment capital, in my opinion, the risk is very high. Now the crypto market is indeed in a bullish trend, but that doesn't guarantee
that it will always be bullish. What about when we use borrowed money as investment capital, then suddenly the market becomes bearish.
Our losses will be doubled.

[Lorence.xD]

That is if you can payback the loan without interest and your investment pays it around that timeframe but if it is otherwise then I suggest not doing so because loan is spending the money that you don't own and paying back more than the amount that you borrowed because of the interest, this can work but only if the loan is a large amount.

[molsewid]

Borrowing money is a bad idea unless you have the means to pay it back over time (say mortgage).
No matter how certain the investment looks.

THERE IS A NO SUCH THING AS A FREE LUNCH! _{(Except HODL Bitcoin)}

Such a bad idea with a high risk because let say you use your borrowed money or loan coin to reinvest in cryptocurrency like bitcoin while you're with it you will be emotional because you're focus was to generate a profit out of the borrowed money, you're being too curious and greedy at the same time because your main focus was to make the best investment especially if your borrowed money has a specific range of time to return with interest and additional burden if you don't have a source or means to pay it back (mortgage).