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

[Coyster]

Taking a loan to buy bitcoin would be discouraged because a lot of people think they can take short-term, high interest loans, make money from their bitcoin investment, return the principal + interest and still benefit from the ROI of the investment, but who can predict the market? And how sure are you that everything will work out as you have planned it.

That said, if you are able to get a long-term loan with low interest, and you also have a job on the side, with savings that can at least repay the loan, you can try borrowing, bitcoin performs so well in the long term and if you are not so greedy, this strategy could work out for you.

[Kelward]

Taking a loan to buy bitcoin would be discouraged because a lot of people think they can take short-term, high interest loans, make money from their bitcoin investment, return the principal + interest and still benefit from the ROI of the investment, but who can predict the market? And how sure are you that everything will work out as you have planned it.

Taking a loan to buy Bitcoin is not the best financial decision that an investor can make because it's a volatile asset. Take for example what happened recently, in the middle of the bull run Trump, implemted the high tariff plan and it affected Bitcoin price negatively. If someone had taken a short term loan to buy Bitcoin having in mind that we were in the bull run, that dip would've made the person to sell at a loss to repay their dept. Bitcoin should be bought with your own money for peace of mind so that you will not panic unnecessarily when price dumps.

That said, if you are able to get a long-term loan with low interest, and you also have a job on the side, with savings that can at least repay the loan, you can try borrowing, bitcoin performs so well in the long term and if you are not so greedy, this strategy could work out for you.

If it's a loan that will run for a very long term like for years with small interest rate, it will be a wise investment plan. Bitcoin is a store of value and before the expiry of the time frame to repay, bull run would've come along and you will get ROI. Repayment wouldn't be a problem in such cases.

[Dzwaafu11]

Even for a startup business, I can't advise anyone to borrow up all the money and start a business with it; it's too risky. The interest rate is attached to the amount on one side, and the risk of the new business, which will definitely incur losses, will mean a startup paying off monthly or weekly debt from the same business will only drag the business down more.

It isn’t advisable to take a loan to invest in Bitcoin or even some other risk; it is not worth it because nobody knows how the market will turn out. The crypto is very volatile, so I don’t think there is a point in taking a loan to invest in Bitcoin, although I understand that there is a gain in it, but instead of taking a loan to invest in it, I would rather use my source of income to be accumulating Bitcoin gradually till it reaches my target.

Cases where I can only advise anyone to take a loan to invest in Bitcoin or any other investment are if they already have an alternative option to repay the loan back and the investment they made will appear to be the second choice, which, if there is not enough profit to cover that loan and interest from the investment, your first choice will come into play and save you from the drama.

The fact is that if there is an alternative to paying back a loan, why take the loan from the first place? You should use that alternative to invest in bitcoin or whatever you want to invest in, because even if the interest is something you should consider, if you have a way of paying back your loan, you should just use that option to invest. Rather than investing all at once, you can accumulate bitcoin gradually.

[BenCodie]

Debt for investment is not unusual. Just like with any loan, it needs to be well strategized. If you are confident enough to take a bank loan then it best not be after BTC has just rallied 100, 200, 300%+ and you are buying the top. There are points in time where this strategy would have worked, and the risk would have paid off...other times it would have been a disaster. It all depends on the loan terms, and when it's taken.

On another note, I have not heard of many banks allowing loans for the purpose of buying Bitcoin.

You're right it's not possible to take up a loan in the name of wanting to buy Bitcoin for reserve or keeps but then taking out a bank loan at the expense of something isn't a good startup which is why it isn't a great deal to take such bank loans cause majorly you may find yourself finding it hard to pay up even with the fact that you took the loan when it's profitable in the markets at a low rates.

I mostly agree - Generally I agree with the notion that borrowing to buy anything creates a difficult repayment process (doesn't matter if it's Bitcoin or (worse if its) consumables), but if the debt can be serviced, the loan is responsible (over 5 years) and income is secure, it's not the worst route to accelerate.

[Berryfolia]

Borrowing money from bank to buy BTC is quite risky owning to the fact that this digital asset you intend buying can never be stable in price due to its volatility nature,but if the payment plan will correlate with the investment plan which is long-term investment is encouraging tho…….

In this case,it is advisable to some extent to take that calculated risk because it will favour the investment to thrive for sometime,irrespective of the ups and downs of the market. Though,there’s a high tendency that the market might add values before the loan duration elapse.

But is not all investments worth borrowing money,unless you’ve stable source of income that you can fall back to,if for instance the assets is not appreciating in value as expected.

[GigaBit]

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?

In taking up any new venture, one has to face some adversities. But those who are wise ignore this issue and take risks, who know how to take risks are able to profit in exchange for taking risks. There are many who, despite being financially prosperous, were not positive about accepting Bitcoin. They are regretting the current situation of Bitcoin. Again, there are many who did not have cash a long time ago but they found the potential of Bitcoin, which is why they invested there despite taking risks. Today, those investors have become relatively successful if they hold bitcoin.

Not everyone can take risks, which is why everyone's perspective will not be the same. If there is a good source of repayment, then it is better to invest in Bitcoin if you have the ability to hold it for a long time. Though this financial advice will not work equally for everyone.

[mindrust]

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.

People were against it because bitcoin is a high risk asset which doesn’t produce any cash income. It still doesn’t make sense btw.

You should only borrow money to make solid investments (like a real estate purchase or starting a business that generates income) that have almost guaranteed returns so you could pay your installments.

Let’s say you borrowed money and bought btc with it and then btc dipped and stayed there for 3 years… What then? You can’t sell it to pay off your debt and If your monthly income isn’t enough to pay the installment then you are effectively bankrupt.

Not every story is a success story sometimes people go bankrupt.

A wise man once said:

“Impossible to go bankrupt if you ain’t got no debt.”

[dezoel]

Taking a loan to buy bitcoin would be discouraged because a lot of people think they can take short-term, high interest loans, make money from their bitcoin investment, return the principal + interest and still benefit from the ROI of the investment, but who can predict the market? And how sure are you that everything will work out as you have planned it.

That said, if you are able to get a long-term loan with low interest, and you also have a job on the side, with savings that can at least repay the loan, you can try borrowing, bitcoin performs so well in the long term and if you are not so greedy, this strategy could work out for you.

Rightly said. There are actually good loans and bad loans, and people need to have this knowledge before they make a decision whether they will take a loan or not. A good loan is a loan that is taken for doing something that is going to generate some revenue for the borrower, and the borrower knows that they either have enough resources available to repay the loan before it's defaulted, or they are a 100% sure that whatever they are going to do is going to make them profits that they can use for repaying the loan.

On the other hand, a bad loan is a loan that is taken without any proper planning or even knowing how the loan will be repaid. If you don't have a permanent job, have no resources at all, and are going to use the borrowed funds into something that is unpredictable and not guaranteed to make you enough money within the period of the loan being repaid, you will get in trouble for it, and such loans shouldn't be taken.

[@nn@_pen9]

Borrowing money from bank to buy BTC is quite risky owning to the fact that this digital asset you intend buying can never be stable in price due to its volatility nature,but if the payment plan will correlate with the investment plan which is long-term investment is encouraging tho…….

In this case,it is advisable to some extent to take that calculated risk because it will favour the investment to thrive for sometime,irrespective of the ups and downs of the market. Though,there’s a high tendency that the market might add values before the loan duration elapse.

But is not all investments worth borrowing money,unless you’ve stable source of income that you can fall back to,if for instance the assets is not appreciating in value as expected.

Even though you have carefully calculated and all the risks in borrowing a loan at the bank, what if your investment does not increase in some time? And so if you plan a long-term or long-term loan, with your income only standard in a company or in your country, And each type of loan has a different term, each bank has its own policy regarding the loan term, and also the bank will consider the borrower's ability to repay the loan when determining the term so think again about borrowing the bank loan, it will only burden your finances and also your daily life and the longer you borrow in the long term the greater the interest you have to pay to the bank. And if your investment makes a profit in the long term, of course the profit only covers the bank's interest.

[Becassine]

Some of you talk about bitcoin as a high-risk investment, when in fact you've probably invested in bitcoin yourself (otherwise you probably wouldn't be on this forum). High-risk perhaps, but over time it was less high-risk than a simple savings account whose interest failed to keep up with inflation.

Many people borrow to buy a car, but for me a car is not an asset but a liability. Except perhaps a classic car. Sometimes it's better to lease a car than to buy one, depending on your needs. But in any case, a car is a liability, depreciating over time and costing a lot to maintain.
I'd rather invest in btc than in a car, for example.

[Cryptoprincess101]

Taking a loan to buy bitcoin would be discouraged because a lot of people think they can take short-term, high interest loans, make money from their bitcoin investment, return the principal + interest and still benefit from the ROI of the investment, but who can predict the market? And how sure are you that everything will work out as you have planned it.

That said, if you are able to get a long-term loan with low interest, and you also have a job on the side, with savings that can at least repay the loan, you can try borrowing, bitcoin performs so well in the long term and if you are not so greedy, this strategy could work out for you.

I can agree to what you said here in the sense that life is about risks and if someone can take a loan that their income can settle in the long run, they can take the risks since they know too well that if the investment didn't yield good results their income will settle the debts. From what i read in the OP, the bank was ready to give him 5 years to repay the loan with less interest rate which is fair enough and before they agree to give him that amount means that they either trust he have a lifetime job, or he has assets that are equivalent to the money he wants to borrow. Even though it is not advisable to take loans to funds an investment that will take years before you can realize profits from it, but if your mind is strong enough to withstand the pain if everything goes wrong then you can bear it.

[Becassine]

In France, we have a type of bank loan where the borrower already has a sum of money placed as collateral and repays the loan in one go at the end.

This is called a "credit in fine" (in english bullet loan): the borrower already has the money that the bank will block in an account. The borrower will only pay the interest for the duration of the loan and repay everything at the end. This allows the bank to be certain of being repaid and the borrower to leverage with a low interest rate.

[Alone055]

Some of you talk about bitcoin as a high-risk investment, when in fact you've probably invested in bitcoin yourself (otherwise you probably wouldn't be on this forum). High-risk perhaps, but over time it was less high-risk than a simple savings account whose interest failed to keep up with inflation.

Many people borrow to buy a car, but for me a car is not an asset but a liability. Except perhaps a classic car. Sometimes it's better to lease a car than to buy one, depending on your needs. But in any case, a car is a liability, depreciating over time and costing a lot to maintain.
I'd rather invest in btc than in a car, for example.

Just because all or most of us have invested in Bitcoin doesn't mean it's not a risky investment asset. We understand that Bitcoin is rewarding in the long run, but let's not forget that reward comes with risk, and even if someone doesn't lose their money unless they buy high and sell low, but the fact that Bitcoin's price depreciates as well due to its volatile nature doesn't make it a suitable option for taking a loan and investing in it because you need to repay the loan within a specified time while you don't know how long Bitcoin's price will take to make you profitable once it goes down from where you've bought.

So, my friend, even though you are right that it's a good investment and those who have funds that they own and know aren't needed now or won't be needed in the near future should invest in it, but it is absolutely not recommended to take a loan and invest in Bitcoin because the market is unpredictable and you never know what might happen next. The only exception could be if a person has a stable and high-paying income source which can help them repay the loan over time.

[shield132]

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.

I remember a guy on Reddit who sold his house and bought Bitcoin when the price was near to 20k US dollarsin 2017, he posted that on Reddit and was crying, he didn't know what to do with his life because he invested 500K into Bitcoin and it immediately crashed and I remember I told him that he should hold tight because in 4 years, that will get fixed. I don't know what is the fate of that guy but in 2021, the price reached 69K US dollars and 4 more years later, it reached 109. I hope this guy held tight and he is now a billionaire.

Btw I didn't know if any bank was giving away a loan for Bitcoin investments, I guess it's different per country but maybe the OP lied to the bank? I mean, in my country you can ask for a loan and if you provide collateral or a solid regular paycheck, banks don't care about your needs, they'll give it to you even if you want to burn that money.

[Becassine]

I remember a guy on Reddit who sold his house and bought Bitcoin when the price was near to 20k US dollarsin 2017, he posted that on Reddit and was crying, he didn't know what to do with his life because he invested 500K into Bitcoin and it immediately crashed and I remember I told him that he should hold tight because in 4 years, that will get fixed. I don't know what is the fate of that guy but in 2021, the price reached 69K US dollars and 4 more years later, it reached 109. I hope this guy held tight and he is now a billionaire.

As with our Frenchbitcointalker who wanted to borrow in 2017, we'd like to know what happened next and whether they held firm after that memorable crash.
I remember the people who didn't understand anything about Bitcoin and who were queuing to buy it in Paris at the Bitcoin House. It's likely that they all wanted to resell in a panic....

But after all, if they made a fortune, it's perhaps better that they don't say so...

[Haunebu]

If you are willing to take the risk, why the heck not? I would for sure if BTC went back to 50 grand or something, but most people wouldn't think twice before saying no to such an idea and you can't blame them.

BTC's crazy volatility is its biggest issue in this case which is why taking loans to invest in it is never advisable unless you are 100% cool with the risk involved. For example, what do you think would happen to BTC and other crypto if Trump decided to ban them?

[Pandorak]

Basically, of course this is very risky, even though the loan is made with the aim of investing which we believe will benefit in a certain period of time, but still this has a high risk, the main reason is because Bitcoin has a volatile price, we don't know when the price will go up and down, plus at that time Bitcoin was still getting pros and cons and regulations that were not fully regulated properly.

Plus the loan interest must be paid according to the agreement made with the bank, maybe when the price goes up it doesn't matter, because you can pay it with the profits you get, but what if at that time the price goes down, of course it will be difficult to pay and also invest with borrowed money, getting mental pressure is heavier than investing with personal money owned.

[Becassine]

Anyway, it's funny. I did a loan simulation on Revolut and you have to promise not to invest the loan in cryptocurrencies. How can they check that we're not going to buy any?

Maybe we need to provide receipts for what we bought? How can that work?

[Fortify]

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 you want to gamble with money, that's fine - you are welcome to spend any money that you have earned through hard (or easy) work. If you want to take out a bank loan though, you sign a contract which usually clearly defines what you will be doing with it, or at the very least will define certain things that you cannot do with it and near the top of the list is spending it on highly speculative assets. Just look at the mortgage market, banks are willing to give very high amounts over a very long term, because it is backed by an asset that is generally trending upwards with decades of history and evidence to back that up. Crypto on the other hand has only been around for less than a couple decades and had a serious market for about ten years. Maybe at some point in future it will stabilize to the same degree, but that's some way off.

[Becassine]

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 you want to gamble with money, that's fine - you are welcome to spend any money that you have earned through hard (or easy) work. If you want to take out a bank loan though, you sign a contract which usually clearly defines what you will be doing with it, or at the very least will define certain things that you cannot do with it and near the top of the list is spending it on highly speculative assets. Just look at the mortgage market, banks are willing to give very high amounts over a very long term, because it is backed by an asset that is generally trending upwards with decades of history and evidence to back that up. Crypto on the other hand has only been around for less than a couple decades and had a serious market for about ten years. Maybe at some point in future it will stabilize to the same degree, but that's some way off.

Ahahahahah

Stop talking about gambling, please. When you see people buying anything, memes, NFTs, even virtual cannabis plants, you can't compare this with a BTC investment. We've already explained the situation of OP well enough.

Besides, you're talking about mortgages; either you're completely ignorant or you've completely forgotten the 2008 crisis. No, real estate isn't skyrocketing for ever, and going into indefinite debt isn't necessarily a good idea. Even the French company SFR (telephone operator), which is over-indebted, is considering selling.