Re: Borrow fiat with your Bitcoin, and [s]never sell[/s] be forced to sell low.
Public Service Announcement:
Where that road leads: Liquidation.
For example, from someone who started out exactly with the oh-so-clever idea that you state in OP—with lower leverage than you think to use, “in case the price drops”:
Later, after worse wreckage:
I don’t have enough Bitcoin (yet) to borrow for anything significant, but this is my ultimate plan. When I get enough Bitcoin, I would borrow no more than half its worth (in case the price drops), and then I would still have Bitcoin along with whatever property I buy with the borrowed money.
This seems like a smarter move than to sell the Bitcoin for fiat money. If I sell, then I have to pay capital gains tax. When the cash is borrowed, there is no tax. Since I still have the Bitcoin, then I will gain when the price rises. If I only have fiat, the “price” will always go down because of inflation.
I hope Bitcoin will eventually replace the fiat system, but until then, the market for cash favors borrowers over savers. This seems like a win-win situation.
Does anyone else plan on doing this?
This seems like a smarter move than to sell the Bitcoin for fiat money. If I sell, then I have to pay capital gains tax. When the cash is borrowed, there is no tax. Since I still have the Bitcoin, then I will gain when the price rises. If I only have fiat, the “price” will always go down because of inflation.
I hope Bitcoin will eventually replace the fiat system, but until then, the market for cash favors borrowers over savers. This seems like a win-win situation.
Does anyone else plan on doing this?
Where that road leads: Liquidation.
For example, from someone who started out exactly with the oh-so-clever idea that you state in OP—with lower leverage than you think to use, “in case the price drops”:
Now, I want to kill myself... or at least, take up alcoholism as a hobby.
(Someone, please quote me.)
(Someone, please quote me.)
Later, after worse wreckage:
Finding that loose change helped so much: $48.82 is now a lot of money to me.
My finances have become dollhouse-sized.
Image: A dollhouse handmade by someone’s grandfather (Dave Parker, 2007). Surely a mansion, compared to what my scaled-down finances can afford.
A few months ago, as I nurtured my growing BTC long-term savings and a zoo of alts, I was throwing around $10k and $40k chunks of stablecoins.
[...]
I am now the proud owner of 0.0495 BTC plus a handful of sats, with a liquidation price a little bit under $19.2k. If Bitcoin somehow breaks below $20k, the whole account is so small that I can hold a dollhouse yard sale of miniaturized alt-dust to raise $50; another $50 infusion would push my liquidation price down by >$1,100. Eventually, I will get around to freeing my itty-bitty dollhouse bitcoins from the encumbering debt of around $853. Meanwhile, I can hold a dollhouse tea party.
$48.82 is now a lot of money to me. Finding that loose change helped so much.
My finances have become dollhouse-sized.
Image: A dollhouse handmade by someone’s grandfather (Dave Parker, 2007). Surely a mansion, compared to what my scaled-down finances can afford.
A few months ago, as I nurtured my growing BTC long-term savings and a zoo of alts, I was throwing around $10k and $40k chunks of stablecoins.
[...]
I am now the proud owner of 0.0495 BTC plus a handful of sats, with a liquidation price a little bit under $19.2k. If Bitcoin somehow breaks below $20k, the whole account is so small that I can hold a dollhouse yard sale of miniaturized alt-dust to raise $50; another $50 infusion would push my liquidation price down by >$1,100. Eventually, I will get around to freeing my itty-bitty dollhouse bitcoins from the encumbering debt of around $853. Meanwhile, I can hold a dollhouse tea party.
$48.82 is now a lot of money to me. Finding that loose change helped so much.