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203 sats \ 3 replies \ @orthwyrm 31 Jan 2023 \ parent \ on: What's your experience with debt? bitcoin
I did something pretty similar to you (£25k @ 7.1% for 7 years). This represents about one year of savings for my salary, so it's something I could pay back if SHTF and Bitcoin plunges to zero.
My average buy-in price was around £35k / BTC. So I'm certainly underwater. BTC will have to trade at ~£57k or above by the time the loan matures in order for the gamble to pay off. I'm pretty confident that this will be the case, due to both Bitcoin's growth and a weakening currency in which the loan is denominated in (GBP having lost ~50% against the USD in the last 10 yrs).
But to be frank I still regret taking the loan. It's somewhat stressful and I would probably end up stacking more sats DCAing at these prices. Lesson learned. lmao
Glad to meet another fellow crazyman in the wild.
Thanks for sharing your story. Just out of curiosity: did you use the loan principal to buy BTC in a lump-sum one shot, or did you DCA it through some period of time?
And sorry to hear the feeling is taking a toll on you. Let's hope things turn out fine. Have you actually run the numbers on how you would have fared if you had DCAd the installment amounts instead? I'm planning to start running those for myself on a monthly basis and also include them in my posts at some point.
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Oh, I'm fine thanks. Maybe my post was a bit melodramatic! I have more than enough BTC from earlier investments to cover the cost if I need to pay back the loan early or lose my job. I'd just hate to be in that position, given the current BTC/GBP exchange rate.
I averaged over a 3 month window between Aug 2021 and Oct 2021, accumulating about ~0.7 BTC.
Thanks to the loan I currently have: +0.7 BTC assets, -£20k liabilities.
The loan repayments are £375 PCM. Had I not taken out the loan and DCA'd this into BTC, I would currently have: +0.3 BTC assets, -£0 liabilities.
(These figures are approximate as the BTC DCA calculators tend to be denominated in USD, and the GBP/USD exchange rate has had a turbulent couple of years!)
If BTC shoots up to new ATHs this year for some stupid reason and stays there, then my loan may have beaten the DCA strategy despite the frankly terrible entry point. It seems more likely to me though that BTC will crab for a year or two, in which case I will have lost quite a few sats in aggregate. I'll only know for sure once the loan matures in 2027, but I suspect this trade will end up leaving me about 0.5 BTC worse off than I otherwise would have been. An expensive mistake for sure!
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Let's hope it turns out fine. And if it doesn't, I guess the difference with the DCA alternative may not be that large.
Anyways, you are obviously smart and have run your numbers, so I'm sure you'll be in good shape regardless of what happens.
Don't forget to publish the outcome in 2027. Low time preference shitposting :)
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