Learning From Michael Saylor: Taking Loans To Invest In Crypto and The Repercussion During Bear Market
With the general crypto price crash, I can’t help but think of big time investors like Michael Saylor who took out loan to buy bitcoin. After buying bitcoin, he usually makes a public statement giving details of the amount of bitcoin and price bought, today, all eyes are on him and helping calculate his losses as the crypto market price is crashing. Lots of crypto doubters are having a nice time as they are flooding his comment to let him know that he is at loss with the current bitcoin price.
I wonder how Nayib Bukele is feeling or what is going through his head right now as the price of bitcoin has tanked really low compared to the price it was bought and don’t forget that bitcoin is the country’s legal tender. This is undoubtedly the toughest time for these big time bitcoin maximalist who have invested a lot of money into bitcoin. Michael Saylor’s company, Microstrategy is a publicly traded company, with the current bitcoin price, it’s expected that the company’s stock price will see some tanking as their crypto asset is also tanking.
Microstrategy has invested a total $3.96 Billion in bitcoin, although the company has been dollar cost average in since 2020. So that means that they didn’t buy bitcoin at the all time high price, but the value of the bitcoin bag is down more than $900 Million. That’s honestly a lot of money, but looking at the risk, if bitcoin was at the all time high of $68k the crypto bag would have been worth over $8 Billion.
Microstrategy just have to be hopeful that bitcoin doesn’t get below $21k to prevent margin call, if it gets to this point, microstrategy will have to get more collateral. This is all a risk that he knew of and was willing to take that risk. This is microstrategy and this his is own risk, but as a regular small retail trader like you and I who can’t afford to casually invest $10 Million on bitcoin, I wouldn’t advise anyone to take loan to invest on bitcoin if they rely on crypto for daily source of income. This can be very dangerous.
This is because, as the current market is dipping, how are you going to pay back that loan? Are you going to sell the coin, take your losses, pay part of the loan and look for money else where to cover the rest, or you will hodl till whenever we get to the next Bull run. But then, you will need to go get a fiat job outside crypto to help pay the loan you took. So before taking that loan to invest in crypto, think of all these so you don’t go incurring more debt to your life.
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This is a wonderful advise, taking loan to invest in crypto can be profitable and same time uncalled for. It is recommended to invest the money one can afford to loss. And if taking loan, I suggest to be a stable coins like HBD for long term.
Thanks a lot for the last finishing part, StableCoin is a low risk investment, it’s way better to take that risk than unstable coin.
Yeah, that's correct 👌
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