Has anyone tried leveraging hodl positions with bank loans?

criza

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Quote from: sheenshane on February 22, 2020, 02:02:33 AM

As far as I can understand here, having a bank loan and putting the fund in the hodl. Leveraging is a good idea. Turning debt into good debt. But using the leverage for hodling really is not a good idea. It has a big risk still and might you will in double jeopardy once you've failed paying your loan. But you are there and can afford to lose maybe you can consider it.

May I ask how much would be the interest from the bank? It would depend on that. But it really is better to use your own asset for hodl. Especially in the long term one. Instead, you've potential to gained it will pay to you debt month interest.

Just my two sats.

Yes, by using the leverage as your investment the risk of losing a lot of money is doubled. The possible profit from it might not be enough to surpass and overcome the risk of investing using loan. It is gambling with great risk especially when you are not that good at investing or trading crypto currency at most. It is better to invest in small amount with your own money than taking double risk for just a possibility to earn money.

sheenshane

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As far as I can understand here, having a bank loan and putting the fund in the hodl. Leveraging is a good idea. Turning debt into good debt. But using the leverage for hodling really is not a good idea. It has a big risk still and might you will in double jeopardy once you've failed paying your loan. But you are there and can afford to lose maybe you can consider it.

May I ask how much would be the interest from the bank? It would depend on that. But it really is better to use your own asset for hodl. Especially in the long term one. Instead, you've potential to gained it will pay to you debt month interest.

Just my two sats.

Febo

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Quote from: jackg on February 19, 2020, 07:49:31 PM

I recently came across this idea as it looks like sites like bybit and bitmex charge about $18 a day in "interest" on leveraged positions and if you're able to check the charts every 8 hours or so then could it make more sense to take out a loan in order to leverage your position higher. If you split funds between bitcoin and traditional investments (such as stocks) or made it so your term was long enough to onlly be ~$50-$100 a month, would it be reasonable to use that raather than leverage trading platforms or does it remove the isolation factor too much and mean you might risk more than you could afford to lose?

Why would you take loan to buy crypoto. It can be worth zero tomorrow because of some fatal flaw. It can be worth zero because someone steals it from you. It can be worth zero tomorrow because. Why being so greedy to risk your future? Bitcoin was in last 10 years probably best investment that ever existed on Earth. It does not seems that gains will slow down drastically. You just buy some Bitcoin whenever you can and take it easy when goes x10 x100 or x1000.

1Referee

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I have seen people do this in the past with stocks. Initially it might go well, but the longer term picture definitely isn't that bright. No matter how much confidence you have in the trend or an asset, markets in general can stay irrational much longer than you can stay solvent, hence the reason I wouldn't dare to borrow anything from a bank for investment/trading purposes.

Bitcoin is so small in terms of market cap and illiquid that you don't have to borrow money to make big gains, you just need some more patience and wait for the next parabolic leg up. Witout borrowed money you can just sit back and not feel any pressure to book gains. It's perhaps not as exciting as trading and whatnot, but at least there is so much less risk you are exposed to.

el kaka22

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When you see a place "charging" you anything, you have to realize that they are making a profit on that as well, we are talking about two very very bad things here so I do not think there is any winners here. Anyone who does either of these things could ever hope to have a success because we are talking about insanely risky stuff here, this is not your mere "I saved up some money aside and will buy bitcoin with it and hold" type of situation, this is your "maybe I will hit the lottery one day" type of deal that we are talking about here. That is definitely why we should try to stay away from this as much as possible.

Nobody can ever be forced to pick from these things, this is not a "if you had to which one would you pick" type of thing, just stay away from them all together.

exstasie

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Quote from: jackg on February 20, 2020, 08:31:03 AM

But, say I put up 1BTC and borrowed £8000 to buy a second then I should easily be able to pay off the loan as long there isn't a huge crash. I saw a daily candle spike upwards by 40%, I don't think downtrend are generally as volatile afaik.

Let me get this straight. You want to take out bank loans so you can leverage your BTC position? Grin

Basically, this would protect you from margin calls at the expense of the lender's safety. This is why most loan products contain terms that prohibit using the capital for investments.

The question is, will you be able to consistently make payments on the loan, no matter what happens to BTC?

If you're relying on selling from the BTC position to cover the loan payments, it's a bad idea. You might end up defaulting.

jackg

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https://bit.ly/387FXHi lightning theory

Quote from: The Sceptical Chymist on February 20, 2020, 04:50:46 PM

As with any leveraging, it depends on what the interest rate is. If you can get cheap money, you can leverage as much as you like--but no, I've never used a bank loan for any such purpose and I think it's a bad idea to take out a loan in order to speculate on crypto. I think I remember in 2017 that there was someone who posted here that he was using his credit card to basically do the same thing as what you're proposing, OP.

Leverage/margin can get you into trouble very quickly--especially in the bitcoin market. If you're considering doing this, OP just be careful. If your investments tank, you're stuck with a loan that probably has a high interest rate. And given how volatile bitcoin has been, I think it's just a bad idea.

Yeah I'd thought as much, it was something one of my contacts mentioned in passing when the price was around $6k.... I was just curious as that'd have made some nice profit already but with quite the amount of risk attached to it...

I had been curious of the idea with stocks too after the next recession - borrow an amount at 4% and pay back a lot less (EU markets make about 7% a year). So you could leave it as a segragated asset and use income to pay it off...

You don't remember "sold the house" in 2017? Of a guy who either sold or remortgaged his house and bought in at $20k... Right at the top.

The Sceptical Chymist

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As with any leveraging, it depends on what the interest rate is. If you can get cheap money, you can leverage as much as you like--but no, I've never used a bank loan for any such purpose and I think it's a bad idea to take out a loan in order to speculate on crypto. I think I remember in 2017 that there was someone who posted here that he was using his credit card to basically do the same thing as what you're proposing, OP.

Leverage/margin can get you into trouble very quickly--especially in the bitcoin market. If you're considering doing this, OP just be careful. If your investments tank, you're stuck with a loan that probably has a high interest rate. And given how volatile bitcoin has been, I think it's just a bad idea.

Quote from: bitbunnny on February 20, 2020, 08:34:46 AM

I guess he warner to say that takes bank loans to ensure funds for trading.

Yeah, that's what he's saying. Borrowing money to trade, regardless of who you're borrowing it from, is leveraged trading. I'm sure there have been quite a few people who've borrowed from banks to do this, though I bet they didn't tell the bank what they were really going to use the money for. Banks don't generally lend money out for the purpose of trading.

buwaytress

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I think that is essentiallythe premise of all these lending platforms actually, masked as decentralised finance. Just that, instead of using traditional assets as collateral to invest in crypto, you're doing it the other way round (staking crypto as collateral for more er... Crypto).

I'm not smart enough to understand how risky it is, but I am enough to know it's riskier than just not using credit or needing to pay interest.

bitbunnny

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Quote from: davis196 on February 20, 2020, 07:37:17 AM

I don't understand what exactly are you trying to say.Can you provide some example?
I wouldn't use a bank loan for leverage trading,because I don't have any collateral to cover that loan.I don't have any valuable real estate to use as a mortgage and I don't have people to guarantee the loan(if it's a consumer loan). The current Bitcoin price isn't that bullish and we might witness some price crash or correction during the next months,so I don't recommend using debt in crypto trading.

I guess he warner to say that takes bank loans to ensure funds for trading.
I don't know where such idea came from but it definetely isn't good. Especialy in the current moment when price is fluctuating and we have corrections.
Even if you diversify your investment portfolio like is suggested there is no guarantee that you will not suffer loss and at the end find yourself in a situation that you have a bank debt.you can't cover or you can cover but with big loss. Very bad idea, don't take loans of any kind for trading, always invest funds that you don't need.

jackg

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https://bit.ly/387FXHi lightning theory

Yeah I'm not saying now, just at some point..
Banks often give uncolaterakised and unbacked ones too.

But, say I put up 1BTC and borrowed £8000 to buy a second then I should easily be able to pay off the loan as long there isn't a huge crash. I saw a daily candle spike upwards by 40%, I don't think downtrend are generally as volatile afaik.

davis196

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I don't understand what exactly are you trying to say.Can you provide some example?
I wouldn't use a bank loan for leverage trading,because I don't have any collateral to cover that loan.I don't have any valuable real estate to use as a mortgage and I don't have people to guarantee the loan(if it's a consumer loan). The current Bitcoin price isn't that bullish and we might witness some price crash or correction during the next months,so I don't recommend using debt in crypto trading.

jackg

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https://bit.ly/387FXHi lightning theory

I recently came across this idea as it looks like sites like bybit and bitmex charge about $18 a day in "interest" on leveraged positions and if you're able to check the charts every 8 hours or so then could it make more sense to take out a loan in order to leverage your position higher. If you split funds between bitcoin and traditional investments (such as stocks) or made it so your term was long enough to onlly be ~$50-$100 a month, would it be reasonable to use that raather than leverage trading platforms or does it remove the isolation factor too much and mean you might risk more than you could afford to lose?

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