Does this Rule Apply to Institutional Investors? - page 2.

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Quote from: mvdheuvel1983 on April 23, 2023, 11:53:56 AM

There's always a popular non-financial crypto advice to not take out a loan to invest in Bitcoin or go all in. These are useful and crucial advice. However, I am starting to think that it doesn't apply to everyone in the Bitcoin ecosystem particularly institutional investors.

This is stale news but I have to bring it back to buttress my point. This JUN 6 2022 headline of this CNBC report reads "Microstrategy takes on $2.4 billion in debt to buy bitcoin despite recent volatility"

This company actually took out a loan to buy Bitcoin. They are one of the top companies when it comes to Bitcoin holdings. I wonder what Michael Saylor was thinking. Is there a possibility that the warning to not take out a loan to buy Bitcoin doesn't apply to institutional investors being that they have been performing well?

You are mixing apples and oranges here. For retails investors, one the most essential factors is timing. When you go all in makes a difference for you but doesn't make any difference for Michael Saylor and other institutional investors. It simply doesn't matter if they buy at $20k or $70k as it's a long-term investment and they're not planning to sell/cash out in the foreseeable future. Cool

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It's true it doesn't apply to bit institutions because if they declare it's from a loan, it means nontaxable. Now I'm no expert on this but I once heard this from a discussion that I have attended before which they normally do so that they can avoid tax.

The difference is that if an individual asks loan from someone to invest in BTC, then he is liable to pay the loanshark with high interest.

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Quote from: mvdheuvel1983 on April 23, 2023, 11:53:56 AM

There's always a popular non-financial crypto advice to not take out a loan to invest in Bitcoin or go all in. These are useful and crucial advice. However, I am starting to think that it doesn't apply to everyone in the Bitcoin ecosystem particularly institutional investors.

These are big companies, and I doubt you know enough about finance to advise them on what to do and what not to do when putting their money in a risky investment. To take such a crucial step they must have weighed the options in all directions and chosen what will benefit them while also having a backup plan in case the risk they are taking does not benefit them. The advice to not take out a loan to invest is general advice for everyone, but it is specifically for those with no financial knowledge who want to make an investment.

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You are talking about an institution like MicroStrategy that already has an asset which he can use to generate funds that he will use to payback the loan. Don't forget that Saylor has a plan on what he is doing,I guess he did this due to the price of bitcoin that will hit the bull run 2025. In the forum,you are advised not to take loan to invest in bitcon due to its volatile nature,so that when the loan time has elapsed,without any profit yet,you might end up selling cheaper than what you bought. This will bring more problem to you because you will need to pay up the loan. Someone with an asset or a business can take to loan to pump the business,because he has what he can rely on to payback the loan. Remember so many businesses and investment needs loan to survive,especially when it is a big firm,you will have the banks on your tip.

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Quote from: mvdheuvel1983 on April 23, 2023, 11:53:56 AM

This company actually took out a loan to buy Bitcoin. They are one of the top companies when it comes to Bitcoin holdings. I wonder what Michael Saylor was thinking. Is there a possibility that the warning to not take out a loan to buy Bitcoin doesn't apply to institutional investors being that they have been performing well?

That's a beautiful question you just asked @ O.P, and I'm going to give you a logical answer regarding this, because if you could make some research, you will get to understand that "Microstrategy" as a company has a net worth of over $3.77 billion dollars, of which taking a loan of $2.4 Billion was a risk they could afford, knowing truly that with such huge sum, they could make massive profit with Bitcoin investment, which is quite different from what we always advocate here on this forum for people not to take loans they can't afford to pay back if eventually the price of Bitcoin fall and yet it's already due time to pay back your loan. As such could be the worst period any individual could face, as load keeps accumulating daily.

So on the contrary, those International investors take loans simply because they have an asset to pay back the loans if things don't go as plan.

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The "don't loan money to buy bitcoin" thing is really geared towards like 95% of people — which are retail investors. In the first place — if you're an institutional investor(or at the very least, a very savvy retail investor), you wouldn't be asking for advice online.

If you truly know what you're doing, then by all means go get a loan for investing. But then again, a huge majority of people actually don't know what they're doing but instead just think they do because of ignorance.

mvdheuvel1983

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There's always a popular non-financial crypto advice to not take out a loan to invest in Bitcoin or go all in. These are useful and crucial advice. However, I am starting to think that it doesn't apply to everyone in the Bitcoin ecosystem particularly institutional investors.

This is stale news but I have to bring it back to buttress my point. This JUN 6 2022 headline of this CNBC report reads "Microstrategy takes on $2.4 billion in debt to buy bitcoin despite recent volatility"

This company actually took out a loan to buy Bitcoin. They are one of the top companies when it comes to Bitcoin holdings. I wonder what Michael Saylor was thinking. Is there a possibility that the warning to not take out a loan to buy Bitcoin doesn't apply to institutional investors being that they have been performing well?

Topic: Does this Rule Apply to Institutional Investors? - page 2. (Read 219 times)