Why it is sometimes possible to take out a bank loan to buy BTC

[Mate2237]

I think that this is a good idea because all forms of business involves one form of risk so if anyone is going to the bank to get a loan for the purpose of investing in Bitcoin it's a welcome development because at the long run the investor is going to enjoy the benefit of his risk that he has made one thing about business men and women is that they don't see the pain that starting up a business brings but the potential return on investment that such a business will bring



Most times people are just afraid of what others will say about what they do going to collect a loan for the purpose of investing in Bitcoin will be a tough decision and I believe that others who are such a person will be discouraging the person but if he or she was convinced about the decision by now he or she must have gotten returned on investment

[Ruttoshi]

Due to the volatile nature of bitcoin and the uncertainties of the market is why people will advise you not to take a loan to invest into bitcoin. You might expect that in a given period of time bitcoin will reach a certain amount and might end up being the opposite. However, it also depends on the time that you are taking the loan to put into bitcoin.

I wouldn't have a rest of mind if I invest into bitcoin with loan money because the predicted year might be wrong and the loan will be serviced for another year. If companies take loans to buy bitcoin, they have collateral and what generates good income for them. If you want to take a loan to invest into bitcoin, do it within your financial strength.

[Reatim]

I remember this thread in 2017 in the French part.

https://bitcointalk.org/index.php?topic=2425439.0

At the time OP wanted to borrow to buy BTC. As we know today, he would have made a great deal (plus, a rare thing at the time, his banker was OK to lend him the money).

Yet almost everyone advised him against it. Why was that?

because no matter what you would be borrowing, just borrowing in itself would be dangerous and not advisable i wouldn’t recommend borrowing fiat even especially if it is a huge amount

It seems to me that all investments involve risk. What makes borrowing to invest in BTC any more risky than investing in a start-up, opening a business or buying a house (which may be full of defects, for example)? If the person's financial situation is stable and the banker, after studying the file in depth, is OK, I don't see why you can't borrow money to buy BTC. In fact, this is what some large companies do.

they are all risky and i would be anxious to do any of what you just mentioned because we never know if we can get our return on investments

[Richbased]

I remember this thread in 2017 in the French part.

https://bitcointalk.org/index.php?topic=2425439.0

At the time OP wanted to borrow to buy BTC. As we know today, he would have made a great deal (plus, a rare thing at the time, his banker was OK to lend him the money).

Yet almost everyone advised him against it. Why was that?

You think everyone should have encouraged him to take a loan and invest in bitcoin then? What if bitcoin didn't achieve this success over the years, he could have probably been backlashed for taking a loan to invest in an asset that he isn't sure of it's potential growth right. Just same way people who want to invest in bitcoin or other cryptocurrency are advised to invest with what they can afford to lose, same way it is advisable to invest with what you have available with you and not take a loan to fund your investment. If only you have borrowed money to invest in a project you are well convinced about its ability to get you some profits and after your investment you now found out that things are not the same way you thought when you entered into borrowing to fund such a project, you now begin to think of how to repay your loan and the emotional trauma you went through after you took a loan and things didn't work as planned initially, you will know that taking a loan to buy an asset you are not certain about its growth was never an option. Again if he had taken the loan and invest in bitcoin, are you sure he could have been patient enough to watch his investment grow till that 5 years without selling at some point? Let us forget about taking loans to buy bitcoins and buy with what we have available then if you feel what you have is not enough for you to buy, you can look for ways to increase your income so that you will have enough money to invest with, borrowing is not the sure way. Perhaps, it comes with its own risks such as not being able to repay when due and the penalty attached for not meeting up with the agreed due date, such as extra interests that it will attract for an overdue.

€50000 at the rate of 1.5% for 5 years which could have been in 2022, do you know what the interest rate could have been in that 5 years? and how much profits could he have made from that 2017 to 2022 for him to repay the loan and still have some profits left with him. And since he do not know the price bitcoin could get to in 2022, there is no way for a calculated risks so even if it's me, i wouldn't have encouraged him to take such a loan.

[avp2306]

I remember this thread in 2017 in the French part.

https://bitcointalk.org/index.php?topic=2425439.0

At the time OP wanted to borrow to buy BTC. As we know today, he would have made a great deal (plus, a rare thing at the time, his banker was OK to lend him the money).

Yet almost everyone advised him against it. Why was that?

It seems to me that all investments involve risk. What makes borrowing to invest in BTC any more risky than investing in a start-up, opening a business or buying a house (which may be full of defects, for example)? If the person's financial situation is stable and the banker, after studying the file in depth, is OK, I don't see why you can't borrow money to buy BTC. In fact, this is what some large companies do.

Because of regulation, since majority of banks is not Bitcoin friendly that's why they heavily discourage people to deal with it and maybe this is the reason why they deny someone to get a loan from them.

From our perspective there's nothing wrong as long as we can pay the debt. But for on their own policy I guess they never allow it due to high volatile nature and they think about Bitcoin is so risky investment.  Maybe for now we should declare different reason so that our loan request will be granted.

I don't know if this crypto friendly banks allow this https://www.ulam.io/blog/the-best-crypto-friendly-banks-worldwide# but it seems the future is really promising for declaring their bank as crypto friendly.

[peter0425]

I remember this thread in 2017 in the French part.

https://bitcointalk.org/index.php?topic=2425439.0

At the time OP wanted to borrow to buy BTC. As we know today, he would have made a great deal (plus, a rare thing at the time, his banker was OK to lend him the money).

Made a great deal? The thread was posting on November 2017 which that time bitcoin was around $7000. 2018 opened with bitcoin reaching its ath of around $17000 which would have made OP happy for sure but in 2018 bitcoin moved sideways and it declined to around $3700 by the end of the year. Who knows how OP would have navigated the volatility of bitcoin back then. Not a lot of information yet about bitcoin's history and especially not a lot of governments have been particularly friendly with bitcoin that time.

Yet almost everyone advised him against it. Why was that?

People who are successful may have been risk takers but does every risk taker end up successful? No some of them do not get the return of their risks. I just think it is extremely risky for anyone to take a loan most especially from a bank to invest in something so volatile. What happens if OP took the loan and was not able to take profit at the right time? I am sure the bank would have eventually hunted him down to pay for it so he can't exactly just keep waiting and holding bitcoin until it goes up.

[Die_empty]

I remember this thread in 2017 in the French part.

https://bitcointalk.org/index.php?topic=2425439.0

At the time OP wanted to borrow to buy BTC. As we know today, he would have made a great deal (plus, a rare thing at the time, his banker was OK to lend him the money).

Yet almost everyone advised him against it. Why was that?

At that time Bitcoin was still young and the risk involved was very high. Are you also sure that he would have held the coin to date? However, people will still advise against buying Bitcoin with a loan because of some reason. The reason will always be the unpredictable price

It seems to me that all investments involve risk. What makes borrowing to invest in BTC any more risky than investing in a start-up, opening a business or buying a house (which may be full of defects, for example)? If the person's financial situation is stable and the banker, after studying the file in depth, is OK, I don't see why you can't borrow money to buy BTC. In fact, this is what some large companies do.

I don't also see any reason why onw cannot borrow to invest in Bitcoin if he can afford to bear the risk. If the bank accepts to give a long-term loan and the interest is not too high, it could be a good deal. Some people borrow to buy shares in a company, and it goes bankrupt, making them lose all.

[Swordsoffreedom]

If the person's financial situation is stable and the banker, after studying the file in depth, is OK, I don't see why you can't borrow money to buy BTC. In fact, this is what some large companies do.

I don't object or see anything wrong with borrowing money to invest in bitcoin if you have a steady source of income and can repay those loans without worrying or depending on your bitcoin investment. But it would be a bad idea and more like gambling if you have no income and borrow money to invest in the hope of getting rich quickly.

Whether or not to borrow money to invest will depend on each person's financial situation such as income, loan amount and ability to repay...It would be wrong to prevent someone from borrowing money to invest while they can repay and vice versa. It would be bad advice to encourage people with no income to borrow money to invest in bitcoin.

[Y3shot]

It seems to me that all investments involve risk. What makes borrowing to invest in BTC any more risky than investing in a start-up, opening a business or buying a house (which may be full of defects, for example)? If the person's financial situation is stable and the banker, after studying the file in depth, is OK, I don't see why you can't borrow money to buy BTC. In fact, this is what some large companies do.

One thing that seems so difficult for some people is to pay debt back , and in every investment it is expected that the investor might have gotten some amount to start up . Sometimes borrowing for an investment is just as if one is not financially balanced for an investment,  and you know when one is not financially balanced it can affect the investment,  that is why no one will encourage anyone to borrow money to start up an investment.

But before one should think of borrowing money for an investment like bitcoin,  it is better to make a proper calculation on how to pay back and I don't think it is right for someone who struggles to get money to take loan to invest in bitcoin.

[uneng]

When you borrow money to start a business, you have a good notion of how much you are going to profit in a monthly basis, since you made a business. Therefore, you have more control over the situation, knowing how long it's going to take to pay the loan back, what is a must when borrowing money.

On the other hand, when you borow money to buy BTC, you have no clue on how long it's going to take until you make profit. You have no way to calculate how much Bitcoin will price in the following month, besides the constant risk of facing losses on your investment.

As consequence, debt starts accumulating and to not make things worse yet, you may feel pressured to give up on your BTC investment, selling it at loss, just to pay the loan back partially. It's definitely a bad idea.

I completely disagree. You can have the best business plan ever, but then a competitor appears out of nowhere and undercuts you, you suddenly have health problems, you're having trouble recruiting, there's a worldwide pandemic, new legislation prohibits you from doing business... You can't have total control over the evolution of your business.

When it comes to bitcoin, the banker will scrutinize your financial status. The borrower will be able to repay the loan thanks to his income. What's more, the loan here was only for 5 years, so if the borrower is highly qualified, he'll be able to find another job quickly, even if he gets laid off. So he won't be under any pressure to resell his btc in panic and make a potential loss.

You never have total control over anything in this life. A business plan just ensures you have more control over the potential outcomes and risks of the business you are planning. All the points you mentioned (risks) should be also taken into consideration when drawing the plan, even though you are talking about extreme chaotic scenarios.

And you really can't compare borrowing money to invest in a business with calculated risk to borrowing to invest in BTC. The risks regards Bitcoin are much more expressive in this case.

Moreover, if the bank checked the individual has a decent income already, why does this person need to borrow money to buy Bitcoin? Just do DCA method with the income he already have without having to pay interest to the bank.

[Dunamisx]

I remember this thread in 2017 in the French part.

https://bitcointalk.org/index.php?topic=2425439.0

At the time OP wanted to borrow to buy BTC. As we know today, he would have made a great deal (plus, a rare thing at the time, his banker was OK to lend him the money).

Yet almost everyone advised him against it. Why was that?

If am also opportune to be present at that scene, i will also discourage him from taking loan, because loan is not what we should always go for like that, this is an investment plan, which if he takes the loan, he stand the risk of loosing or earning from the investment he makes depending the the investment strategy taken, if he lose, then he has been on debt, if he earns more as profits, then remember that the interest realized is still going back to the banks because he is on loan and must give a repay back on percentage, all he would have earned must have been taken back by the bank, despite the risk he has taken, except we have our own personal money, it is a bad idea to lend money to invest.

[Becassine]

The bank checked the guy's accounts. He probably has an interesting salary and has probably paid off his principal residence. He can afford to borrow 50,000 euros over 5 years and pay it back without any problem, since the banker has said Ok, so his file is solid.

He could invest in anything, shares, his cousin's business... He can pay back the 50,000 euros anyway. He won't need to sell within 5 years, barring a catastrophe.
 
So why not bitcoin? I don't understand how he's taking any risks if he keeps his bitcoins over the long term. But in any case, if the btc had disappeared completely, he'd have been able to pay it back with his salary anyway. He would have invested what he could afford to lose. And only investments make money, not salaries. In this case, he was counting on leverage, and I think that's a great idea.

€50000 at the rate of 1.5% for 5 years which could have been in 2022, do you know what the interest rate could have been in that 5 years? and how much profits could he have made from that 2017 to 2022 for him to repay the loan and still have some profits left with him. And since he do not know the price bitcoin could get to in 2022, there is no way for a calculated risks so even if it's me, i wouldn't have encouraged him to take such a loan.

In France, banks usually offer fixed rates and very rarely variable rates, which are capped.

[Churchillvv]

If one has any kind of payment expected somewhere to pay back the loan then I would agree that borrowing can be a little bit okay but if one is expecting to pay back from the profit gotten from the investment then it's a very big mistake if one tries it.

It's very normal for guys to have discouraged the proposal but if anyone wants to take the risk since life is filled with risk already then in a long term should be the agreement with the lender hence to avoid all the lost that comes from volatility.

[batang_bitcoin]

I don't also advice borrowing money for buying BTC. The interest rates are the ones that I am concerned with. But we know that we pay those interest rates and fines whenever the value of the bought BTC increases. That's one thing and there's always a due for it and we can't due on when our BTC assets are going to increase in value, we cannot time it. But the lenders, they're going to time us and give us due dates and if the borrower doesn't have source for it, much better not to take a loan.

[Kristiyana]

I remember this thread in 2017 in the French part.

https://bitcointalk.org/index.php?topic=2425439.0

At the time OP wanted to borrow to buy BTC. As we know today, he would have made a great deal (plus, a rare thing at the time, his banker was OK to lend him the money).

Yet almost everyone advised him against it. Why was that?

It seems to me that all investments involve risk. What makes borrowing to invest in BTC any more risky than investing in a start-up, opening a business or buying a house (which may be full of defects, for example)? If the person's financial situation is stable and the banker, after studying the file in depth, is OK, I don't see why you can't borrow money to buy BTC. In fact, this is what some large companies do.

If it is the company that is taken the loan I don't  think if there's anything wrong with that, because we are 100% sure that they will pay back the money in due time. Though sometimes a company can decide to take loan from bank or even from thier fellow companies, when they must have run out with cash/funds. However, is obvious that bitcoin is a very good asset in the future but anyone who can not afford to invest in bitcoin should not go for a loan. Because the market is decentralized Which means that no one have control over it, so if there's any dip or increase in the price there's nothing you can do than to panick.

[Baofeng]

I remember this thread in 2017 in the French part.

https://bitcointalk.org/index.php?topic=2425439.0

At the time OP wanted to borrow to buy BTC. As we know today, he would have made a great deal (plus, a rare thing at the time, his banker was OK to lend him the money).

Yet almost everyone advised him against it. Why was that?

It seems to me that all investments involve risk. What makes borrowing to invest in BTC any more risky than investing in a start-up, opening a business or buying a house (which may be full of defects, for example)? If the person's financial situation is stable and the banker, after studying the file in depth, is OK, I don't see why you can't borrow money to buy BTC. In fact, this is what some large companies do.

For sure, take for example, Saylor he is using his company as a leverage to buy more Bitcoin and it seems that it is a very effective method. But it's not for everyone, as you have to compute how much you are going to pay the banks + interest as compare to what you might have gotten if you invested that loan money to Bitcoin. Perhaps you can make a lot of money, or just break even or lost some of it.

So it might take some time for someone to take that kind of computation, so I guess it will be complicated to us.

That's why for me it's not the best way to go, you can do just DCA for at least a year and see how it goes as compare to making a bank loan payable in 12 months. And then it will still depend on what cycle we are.

[Josefjix]

So why not bitcoin? I don't understand how he's taking any risks if he keeps his bitcoins over the long term. But in any case, if the btc had disappeared completely, he'd have been able to pay it back with his salary anyway. He would have invested what he could afford to lose. And only investments make money, not salaries. In this case, he was counting on leverage, and I think that's a great idea.

Firstly, maybe the banker doesn't support the investment plan of this guy, mind you, the bank do not like BTC for many reasons and so it's against their policy to partake in this kind of business negotiations.

Secondly, it's not perfect to borrow money for BTC investment, it's more risky doing so and may cause a very severe pain on the borrower if he can't meet up the percentage agreed every months, I wouldn't advise anyone close to me to undergo this kind of business.

[Powerjumboo]

I remember this thread in 2017 in the French part.

https://bitcointalk.org/index.php?topic=2425439.0

At the time OP wanted to borrow to buy BTC. As we know today, he would have made a great deal (plus, a rare thing at the time, his banker was OK to lend him the money).

Yet almost everyone advised him against it. Why was that?

It seems to me that all investments involve risk. What makes borrowing to invest in BTC any more risky than investing in a start-up, opening a business or buying a house (which may be full of defects, for example)? If the person's financial situation is stable and the banker, after studying the file in depth, is OK, I don't see why you can't borrow money to buy BTC. In fact, this is what some large companies do.

Big companies can take loans to buy bitcoin but people like us should not take loans to buy bitcoin because now if we take loans and buy bitcoin and at some point if bitcoin gets dumped and I make a loss then I will not find any other way to pay my loan then of course I will have to sell bitcoin at a lower price to pay the loan and if not then I will have to sell some of my land and house to pay the loan but in case of big companies it is different because they will make profit and later they will be able to pay the loan from this earned profit to pay the loan. So I would say we should not take loans and should not invest in bitcoin.

[STT]

You can take a loan so long as they can take off your assets for failing to repay the loan.    BTC is also now more regulated in various places it wouldn't be allowed but you could also just take the loan for cash and decide yourself later.    You can always take a loan for cash if they think you are rich, thats the main determination.   They'll just seize something else if no repayment is made, being poor or with no assets they'll refuse many loans.

They did very commonly allow leveraged trades on BTC but it was gradually tightened down on for any normal common trader.   You have to some kind of higher qualification last I looked for the FIAT loans at least.   I still have open positions that pre date tax and legal changes for leveraged or loan trades of BTC.   Its a shame they never let me put in pension funds years ago when I requested but it was seen too risky to allow.  

[slapper]

You’re right. It shouldn’t be weirder to borrow for Bitcoin than to borrow for real estate or a café that sells flat whites at 3x cost. But you're missing the psychological distinction: people are wired to follow trust maps

And back then, Bitcoin didn’t exist on enough trust maps

When someone opens a business, no one talks about volatility. They talk about vision and courage. When someone borrows to buy BTC, it’s suddenly irresponsible even though the 5-year Sharpe ratio crushes most startups. Business failure is acceptable. Bitcoin success feels like a miracle to people who don’t understand systems thinking

Some would say: volatility is bad for economic planning, and Bitcoin doesn’t help with that. Other would say: every civilization is built on shared fiction, and Bitcoin hasn't replaced the story of fiat yet. But we would probably agree: people fear what breaks consensus more than what loses money

It’s fine to borrow for BTC if you understand your own time horizon, the layered nature of systemic collapse, and you’re not attached to being right tomorrow. Most people aren’t wired for that. That’s why they warned him off. Not because it’s wrong. But because belief is still too expensive for the average person to carry on loan