Bitcoin borrowing?

[boyptc]

Thanks y'all for the discussion. If you have any experience in borrowing stablecoin onchain and actively running some strategies to earn yield while holding bitcoin, would love to know. I believe Nexo is centralized, like an exchange.

I haven't but be careful with both centralized and decentralized platforms that allows this.

They're mainly targeted by hackers and that's why many DeFi's that allows this type of borrowing of stable coins have been reported to be exploited.

While yield farming is profitable and easy, if you have significant amount of money that makes you want to put more so that the % of profit is greater. I'll be careful on how much I'll put into these.

[SmartCharpa]

Do you think take loan just for longs terms holding is advisable? Why ask this equation is that their some people that don’t have any sources of income and they have interest to invest in Bitcoin for a long period of time, if those kind of people take a loan and invest at the end it will not favour them. As we all know that Bitcoin is not stable the market is fluctuating all the time, if it happen that the duration of this loan is due to pay how do we expect him to pay back when he doesn’t have any other alternatives to pay back the loan?

And once the loan is overdue it will definitely affect his Bitcoin investment, and that is why is not advisable for anyone to take a loan just because of Bitcoin investment. Than buy the bitcoin and later sell at lose, I think is better to wait for the right time when your capable of buying and hold for periods of term.

Holding a bitcoin is also holding our money. There may be situations where you will not have a choice than to sell your bitcoin or part of your portfolio. Do not borrow money because you don’t want to touch your money during any unexpected situation. Bitcoin is also our money that we can spend. It is not something that we must not sell, even if our lives is at risk. I feel those who are willing to take a loan because they don’t want to touch their Bitcoin will refuse to sell in any situation.

In a situation where you are guarantee that you will be able to pay back before the deadline date, then it not a bad idea to take any loan. But if you are sure you can pay back the loan before the repayment date, just sell the bitcoin and solve the problem. As long as there is life, there is still hope to buy back bitcoin and continue holding.

[TedMosby]

Hey y'all,
I'd love to hear your opinions on if/why you borrowed against your Bitcoin?
Do you think it worked as you wished? Is it worth it?
Cheers

I once tried borrowing against Bitcoin on a CEX. IIRC, it was on Bybit. I am the type of person who learns by doing. So, at that moment, without much knowledge about Bitcoin-backed loans, I didn't even know basic terms like LTV. I just tried it using my common sense because I had read a little about Michael Saylor doing that to acquire more BTC

Well, as you may have guessed, it didn't go well. I lost money, but not much. Just a small percentage of what I actually spent. CMIIW, it's still based on the market, especially if you use the loan to buy more BTC. You can only make a profit using this strategy if the price goes up enough to cover the borrowing costs. Here, you're basically racing against liquidation risk and interest rates.

For other reasons, like getting instant liquidity for something outside crypto, I've never done that. I prefer to sell it rather than take out a loan against my BTC. The market is still too volatile, and Bitcoin-backed loans may not be as worth it as they sound yet. I think a high LTV is just a trap.

[#CapsLOck]

In some cases, it may be wise to take out a loan using Bitcoin. But it ultimately depends on the terms of the loan. If the price of Bitcoin suddenly drops. The borrower may be forced to liquidate just because he or she does not believe that it has long term potential. With the passage of time. Pressure is also piled up with interest. The worst thing someone can do is to take on a loan that they don't need just to not sell btc. The amount of the loan and the ability to pay back the loan with a steady income appears to be more relevant than optimizing for the most you can borrow.

[GeorgeJohn]

I'd love to hear your opinions on if/why you borrowed against your Bitcoin?

Do you think it worked as you wished? Is it worth it?

Actually, I can borrow against my bitcoin, and the major reason I will borrow my bitcoin, is when i was asked to borrow willingly without pressure..but it's something that they will mandate me or give terms and conditions that will force to do, I will not borrow against my bitcoin, because the price of Bitcoin is not stable, because on the process the prices of Bitcoin might changes, so you can borrow elsewhere and pay your debt and recover it from the increase you made from bitcoin price skyrocket...

[shinratensei_]

Thanks y'all for the discussion. If you have any experience in borrowing stablecoin onchain and actively running some strategies to earn yield while holding bitcoin, would love to know. I believe Nexo is centralized, like an exchange.

I'd only advice to supply bitcoin and borrow stablecoin from an on-chain lending platform that carefully manage their oracle to avoid liquidation, people underestimated it but if an event like 10 october happened, you could get liquidated and got impacted by the liquidation penalty. Finding a lending platform that properly vetted the allowed collateral is also important, trust me you don't want to be another victim of an illiquid bad debt, but most importantly be sure the platform have some kind of protection fund or term that says the reserve can absorb losses. Don't let your capital become the junior tranche, the first one taking all the hits!

[Sulegzy39]

I don't know where some people get the idea of borrowing Bitcoin from, but to me, it's totally a no-go; I can't take on this for any reason. Bitcoin is expected to be invested when we have the capacity to afford investing in it. There are many ways we can invest in Bitcoin if we take our time to either earn it, mine it, or get it as a free offer. Some can even exchange their Fiat to hold Bitcoin and turn it into an investment asset.

You really can't compare yourself to other people. Some people have been borrowing bitcoin from others for a long time, but I don't think that's a sign of fear because one thing about investing is that you can never predict how market strategy will work. Some investments take a long time, and if you borrow bitcoin from someone, it depends on your agreement with them regarding the return.

However, I will not borrow against my bitcoin because the price of bitcoin is unstable and it will affect you if you borrow from someone. The only reason I can think of is that if someone takes out a loan, they will be afraid because you will repay the loan exactly, with no interest.

[Peanutswar]

Now some of the banks adapted the use of the collateral with cryptocurrency and of course to get assured that you will pay them is you will deposit into them your bitcoin until the locked in period of time. So if you think you are capable I guess you dont need to worry most of the banks will approved this kind of collateral.

If you are saying about bitcoin will be use to borrow for me its not kind of worth it depends on the risk. Possible the price goes up and of course you need to pay as a form of bitcoin then its getting bigger the cons is if the price goes down and you need to pay as is with the BTC amount you borrowed : BTC pay you pay.

Or you are saying worth the risk if you will borrow money just to have bitcoin, for me its kinda because there is a market volatility, the interest will cater by the market pump.

[Findingnemo]

Just see it as someone has a land, but the person need money. The person may prefer not to sell the land just to avoid paying tax for the land sold and because he believes the land price in the next few years would have increased very well. These are the two main reasons someone can decide not to sell his asset or property, but borrow money instead.

Yeah, the logic is same but someone is taking a loan against land makes more sense because if they want to sell it then it is not that easy to liquidate and it will take even months to find the buyer and more weeks to finalize all the legal documentation involved so their priority for immediate need for cash would be going for a loan or they have to sell it for less price than market price but with bitcoin it is not same, they can just sell it and get the fair value at present and no need to go though hassle of finding a lender who would accept bitcoin as collateral and we all forgot that loan comes with interest.

[Dareo]

Indeed, I never took such a loan before, because my thinking is a little different. I am a proponent of long term investments and I don’t like any volatility and instabilities in the market too much. As we know, Bitcoin has very dynamic changes in price, so taking such a loan may be a source of stress or fear. However, for those people who really need fiat money at once but they do not want to sell their Bitcoin, this may be an interesting way out of the situation. At the same time, I don’t think that taking loans and investments somewhere else or even selling Bitcoin for short term trading is a good choice at all.

[SamReomo]

I am not sure about others but I can't even think about borrowing against Bitcoin because it is going to be very risky. I would rather borrow against something else than borrowing against Bitcoin.

Those who believe in Bitcoin's long term good returns never take such kind of risks. Only the ones who don't understand the importance of Bitcoin might take loan against it but the smart ones will never do something like that.

[The Cryptovator]

For me, I would probably borrow against my Bitcoin if I need urgent cash rather than selling it. Because I believe Bitcoin will reach a new high when I could have more money from the Bitcoin. I would repay my loan when I have money from other businesses or jobs. So my Bitcoin will be untouched.

But we have to remember about my Bitcoin security. Because if the Bitcoin goes to the wrong hand or to a scammer, then they might not return it back to you. Lending platforms, including exchanges, are centralized, so you have to think twice before keeping your Bitcoin as collateral. I used forum lenders for borrowing, so I have to choose the right platform.

[ndutndut]

Hey y'all,

I'd love to hear your opinions on if/why you borrowed against your Bitcoin?

Do you think it worked as you wished? Is it worth it?

Cheers

It's best to never borrow money to invest for any reason; this is to prevent us from being financially worse off because bitcoin prices are unstable they can go up anytime and the opposite can happen too. Also, borrowing money using bitcoin shouldn't be done because bitcoin prices are very fluctuating. Okay, if when you borrow with bitcoin the price is low or even keeps dropping, that might seem fine, but imagine the reverse if the bitcoin price keeps going up while you're paying back with the same amount of bitcoin of course this will seriously affect your finances in the future.

I want to share an example from my own experience. This isn’t really about Bitcoin but it’s pretty similar if we understand it well. Four years ago, I pawned my rice field using gold, but now the price of gold is much higher than it was 5 years ago which makes it harder for me to pay it back because the price of gold has doubled since four years ago. The same example applies if we take a loan using Bitcoin because when the price goes up we’ll have trouble paying it back.

[Odusko]

Hey y'all,

I'd love to hear your opinions on if/why you borrowed against your Bitcoin?

Do you think it worked as you wished? Is it worth it?

Cheers

If I have the option of taking a loan instead of spending my Bitcoin, I think I will gladly take the loan after carefully reading the terms of the loan and the interest and repayment plans, just as the first comment mentioned Bitcoin is an asset taking loan against an asset is not a bad idea at all, so long you take every precautions to avoid getting trapped in high interest that can possibly eat up your profits in the future.

[Webutxo]

Hey y'all,

I'd love to hear your opinions on if/why you borrowed against your Bitcoin?

Do you think it worked as you wished? Is it worth it?

Cheers

Why borrow against your Bitcoin? I think what to should do when you are in need of money is to look for alternatives. Maybe you are not use to borrowing but I will tell you one thing about it. If you are not stuck between life and death, try as much as possible to avoid borrowing be because, first the interest is not friendly, if you now use Bitcoin as collateral, you will not have peace or mind because of fear of liquidation that may occur.

Some people will tell you that you can borrow small amount and nothing is going to happen but I'm discouraging you that anything that is going to make you borrow money against your asset avoid it because Bitcoin is an asset, anybody that you tell that you want to use Bitcoin as collateral and borrow money, they are going to give it to you ASAP, so avoid.

[Audrey Simmons]

Those who believe in Bitcoin's long term good returns never take such kind of risks. Only the ones who don't understand the importance of Bitcoin might take loan against it but the smart ones will never do something like that.

The risks only take effect when you don't pay back the loan and interest. I think many people don't mind using their Bitcoin as collateral, as long as the borrower is a trusted source, and you also keep to the agreement. It is not much of a big deal, except for the part where someone else will know what is worth in your possession.

[Odusko]

In some cases, it may be wise to take out a loan using Bitcoin. But it ultimately depends on the terms of the loan. If the price of Bitcoin suddenly drops. The borrower may be forced to liquidate just because he or she does not believe that it has long term potential. With the passage of time. Pressure is also piled up with interest. The worst thing someone can do is to take on a loan that they don't need just to not sell btc. The amount of the loan and the ability to pay back the loan with a steady income appears to be more relevant than optimizing for the most you can borrow.

You are misunderstanding the concept, and bjt because someone liquidated theirs Bitcoin to offset their loans when the price is not favorable doesn't mean that the person doesn't believe in the long term potential of Bitcoin, it could be because the person failed to build an emergency funds that support his other daily expenses or loans repayments.