Jay [MOVED HERE] on Nostr: I'm using ledn, and the idea is that I take a loan out to cover my next month's fiat ...
I'm using ledn, and the idea is that I take a loan out to cover my next month's fiat expenses and pay it off with Bitcoin as the price increases.
Say I take out a 1000 USD loan at 80k BTC with 15% APR on a 12 month term, that's 1,250,000 sats. In a simple case, if Bitcoin immediately rises 20% to 96k and I pay off the loan, I only need to use 1,111,111 sats to pay it off (or a more as interest accrues).
In doing so, you essentially buy 1000 USD for 888 USD in the no interest scenario. With interest, that margin will shrink, but if Bitcoin grows even faster than 15% APR, then that margin will increase.
My only heuristic is to pay down the debt when the Bitcoin price is higher than when I took out the loan because I'm too retarded to calculate all of the above as I'm paying it off. If the Bitcoin I spend is less than the amount when I took out the loan plus interest, it's profitable. But it's way better than buying debt to buy Bitcoin since I can pay off the debt at a loss and not really care too much since I was spending that money anyway.
Say I take out a 1000 USD loan at 80k BTC with 15% APR on a 12 month term, that's 1,250,000 sats. In a simple case, if Bitcoin immediately rises 20% to 96k and I pay off the loan, I only need to use 1,111,111 sats to pay it off (or a more as interest accrues).
In doing so, you essentially buy 1000 USD for 888 USD in the no interest scenario. With interest, that margin will shrink, but if Bitcoin grows even faster than 15% APR, then that margin will increase.
My only heuristic is to pay down the debt when the Bitcoin price is higher than when I took out the loan because I'm too retarded to calculate all of the above as I'm paying it off. If the Bitcoin I spend is less than the amount when I took out the loan plus interest, it's profitable. But it's way better than buying debt to buy Bitcoin since I can pay off the debt at a loss and not really care too much since I was spending that money anyway.