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Is it Time to Mortgage your Bitcoins?

in money •  last year

0723bitcoin.jpg

There comes a time when you've made a decent return on the equity of your home. You might want to remortgage and take some of that equity out, to get an extension, help a family member get on the property ladder or invest in a rental property.

You still want to have skin in the game but you don't want to step out of the game.

I want to hold bitcoins long term but I also want to invest and spend some.

So its time to mortgage my bitcoins!

I'm coming from the context of providing myself with a loan to be repaid at a later date. Not to lavishly spend my bitcoin and increase my 'current' standard of living.

No, more like a bridging loan so I can have that extra capital required to.. buy a property let's say...

My plan is to be really conservative, maybe take out 5-10% of my portfolio, convert to fiat and then buy that 5-10% on margin on bitmex.

Once I've paid back that 5-10% by buying btc back...

I can have my cake (the same btc exposure) and eat it too (be able to use the money to finance other investments).

This will work for me because I want to always hold x bitcoins, therefore the opportunity cost of those bitcoins used for margin is irrelevant.

I'm holding for the long term, when btc could be worth multiples of what it is now.

I'm investing the money and not spending it on consumption.

I'm being conservative with the amount I take out, at a max of 10%.

The only potential drawback......

This will have to be an investment loan paid back relatively quickly due to the funding rate on bitmex. I haven't worked out the numbers yet over time. It could be a dealbreaker though.

Has anyone else considered any ways to have your cake and eat it too?

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Well from my experience "trading on margin" in the US equities market; I love your idea on paper. Since it is going to be a long-term hold you need to very closely consider the cost of the margin over X, Y and Z timeframes as well as being SUPER conservative with the amount of leverage you use.

When trading in and out you have less exposure to major drops or corrections, when holding long-term one must be prepared for the "outlier" actually happening.

In the end, great idea. Just run the numbers to make sure your margin costs aren't eating to highly into your holdings if BTC doesn't move the way you expect. Keep that leverage low, trust me from experience.

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It depends on if I use the spot markets or the futures market. There are no funding rate fees if I keep flipping the futures every 3 months :)

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if you're convince on this

This will work for me

I say do it - what you think is always right ;)

it's not a bad thought - go ahead sink your teeth on the cake - ya aint the only one doin that anyway

I thought that the whole idea of crypto was to stay OUT of debt?

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Well it's debt to yourself. In order to leverage your own investment.

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that sounds like banker speak..

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Bankers make money

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bankers rape and pillage and create wealth from nothing. bankers are pure criminals.

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What I was aiming for was to leverage a conservative amount of your bitcoin in order to use it to invest in your own projects. Whilst still exposing yourself to potential gains in appreciation.

It's your own debt and controlled solely by yourself, not bankers.

You are your own banker. So if you rape and pillage anyone, it's only yourself.

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True.. but you could be taking away your own profits.. and emulating the bankers, and their ways was mostly what I cared about. Your money is your own, and who am I to tell you what to do. I just don't want people to think being a banker is acceptable.

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To be honest it sounds like you have some anti banking dogma ideas.

All I was saying was, use the assets you have to leverage taking a very conservative sum out.

Still be exposed to the moves in bitcoin.

Have the best of both worlds.

Not to be rude, but you have absolutely no idea what you're talking about within the context of this post.

I will not be taking away my own profits, in fact I'll be ensuring them. Hence hedging my exposure via margin. Conservative margin.

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it is. flawed logic.

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^THIS!

If your going to take some profits you've made to buy property, I personally think thats a great idea. It will be something I will be looking to if I get to that level. Land and other assist like gold silver is always a good idea to branch off into. So I would say let you BTC help you get the things you want in life.

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Yep, have a bunch of gold already. Poor performer compared to crypto, I'll be liquidating it shortly, along with stocks.

I'm only getting out of a small chunk of crypto, by 'mortgaging' - not really getting out of anything .

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I would take everything out of your stocks and keep the gold. Do you hold the gold? If not you should make sure you get your gold sent to you and not let a 3rd party keep it. Crypto is still in its infancy so at the moment it is great to keep investing in especially with all the ICO's happening invest in the right one and it could set you for life.

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I believe mortgage is yet to see its final correction, right ahead.

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classic Bitcoin jargon?

nice post

Hey @wingz,

Great article and I wish you all the best!!

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Haha! Long time no see, thanks for stopping by :p

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You are welcome. I hope you are keeping well?

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I'm good, loving these crazy crypto swings :o

Are you buying swaps or futures on BitMex? With swaps you'll probably have to pay funding, but with futures you won't although they will expire and you may need to pay a premium (sometimes you can get them cheaper if the market is falling). Also since the funding rate largely depends on market conditions, it is hard to predict. At the worst case in a bull run you'll be paying 0.375% every 8 hours which is a lot for a "mortgage". Granted things could reverse and you could get paid the same amount back but that is rare and overall longs usually pay more funding.

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I'd have to juggle it a bit trading the swap v futures spread and maybe make the markets a little during negative funding rates to stay on top. Long term definitely the futures. Thanks for your comment.

great post, just brought you up a few cents. Following, pls follow back :)

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Following you right there. :)

Always glad to follow! :D

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thanks! :) Have a nice weekend.

This is an intriguing concept. It's got me thinking. I hope to hear how it works out.

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Might as well, better to do this than sell out and regret it if there's a big rally. :)