Borrowing to Buy Bitcoin: Is It Ever Worth the Risk?
Borrowing to buy crypto has often been advocated by various influencers, but the consequences can be disastrous.
Analysis
The cryptocurrency space is expected to reach 1 billion users in 2030. While some are known to make a fortune out of it, others have ruined their finances, chasing similar results, going as far as getting credit to buy crypto by putting up valuable assets, including their homes, as collateral.
Borrowing to invest can make sense under very specific conditions, but using a home equity loan is also extremely risky. For example, this means that an investor's house is used as collateral for a loan.
Cryptocurrencies have in the past provided spectacular results for investors, but have also seen them go through long periods of bear markets in which many lost hope and sold at a loss, those who managed to reap the biggest rewards. As any analyst or financial advisor would say, past results are not indicative of future results.
When Bitcoin (BTC) was trading at $57,000, MicroStrategy CEO Michael Saylor suggested investors use all their money to buy Bitcoin and "figure out how to borrow more money to buy Bitcoin". At one point, Saylor suggests that they should "mortgage their house" to get more BTC.
Never forget Michael Saylor encouraging unsophisticated investors to liquidate all assets they own to buy leveraged Bitcoin.pic.twitter.com/Wvv3c2JpOZ< /p> — Nate Anderson (@ClarityToast) June 13, 2022
As of this writing, Bitcoin is changing hands at nearly $23,000, meaning investors who followed Saylor's words would now be deeply underwater. MicroStrategy has borrowed money from Silvergate Bank and
Borrowing to buy crypto has often been advocated by various influencers, but the consequences can be disastrous.
Analysis
The cryptocurrency space is expected to reach 1 billion users in 2030. While some are known to make a fortune out of it, others have ruined their finances, chasing similar results, going as far as getting credit to buy crypto by putting up valuable assets, including their homes, as collateral.
Borrowing to invest can make sense under very specific conditions, but using a home equity loan is also extremely risky. For example, this means that an investor's house is used as collateral for a loan.
Cryptocurrencies have in the past provided spectacular results for investors, but have also seen them go through long periods of bear markets in which many lost hope and sold at a loss, those who managed to reap the biggest rewards. As any analyst or financial advisor would say, past results are not indicative of future results.
When Bitcoin (BTC) was trading at $57,000, MicroStrategy CEO Michael Saylor suggested investors use all their money to buy Bitcoin and "figure out how to borrow more money to buy Bitcoin". At one point, Saylor suggests that they should "mortgage their house" to get more BTC.
Never forget Michael Saylor encouraging unsophisticated investors to liquidate all assets they own to buy leveraged Bitcoin.pic.twitter.com/Wvv3c2JpOZ< /p> — Nate Anderson (@ClarityToast) June 13, 2022
As of this writing, Bitcoin is changing hands at nearly $23,000, meaning investors who followed Saylor's words would now be deeply underwater. MicroStrategy has borrowed money from Silvergate Bank and
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