Redditor Sees 25% Increase After Investing $59K in Bitcoin with Personal Loans

Borrowing to Purchase Bitcoin

A Redditor and member of the r/CryptoCurrency community has asserted that, after borrowing a total of $59,000 in three separate personal loans over the last 18 months to purchase Bitcoin (BTC), they have seen a 25% increase in their investment of $19,500.

According to the Redditor with the unsavory username of “Vaginosis-Psychosis,” they now possess a total of 2.65 BTC, which is worth $80,400 at the present market rate, and are gambling on the value of BTC reaching $100,000 by the start of 2025.

In a post on r/CryptoCurrency dated June 30, the user detailed their approach to the highly speculative process of obtaining BTC.

The first two loans were taken out in February and June of 2022, for amounts of $15,000 and $20,000 respectively. Both loans had a fixed annual percentage rate of 6% and 4.9%, with respective monthly payments of $225 and $326.

In June of this year, a third loan of $24,000 was taken out with an APR of 8% and monthly payments of $405.

The Redditor states they have already paid off the $15,000 loan in May, in addition to reducing the second loan by $3,500. Subsequently, they are now focusing on the newest loan, since it has the highest Annual Percentage Rate.

They assert that the average price for the BTC they have accumulated is $24,000 when interest payments are taken into account, and $22,264 when interest payments are excluded.

“I anticipate that Bitcoin will not be trading within this range eighteen months from now; I anticipate that it will be around $100,000 per coin. Therefore, I am willing to accept the high annual percentage rate in the short-term in order to benefit from the exponential price appreciation of Bitcoin in the long-term,” they added.

Risks of Taking Out a Loan to Invest in Cryptocurrency

The U.S. Securities and Exchange Commission has determined that filings for spot Bitcoin ETFs are inadequate, according to a report.

At the time of writing, the post had garnered more than 500 comments, with some being in favor of the idea and many others cautioning against the risks of such an approach.

“The most upvoted comment, posted by user “middlemangv”, reads “Taking a loan for crypto investing sounds like a horror story to me”, with “NotAdoctor_but” adding that it is indeed a horror story. They point out that the OP took a calculated risk, which most people won’t do, making it an example of survivorship bias.”

The Redditor further elaborated that they are unmarried and childless, bringing in approximately $60,000 a year from their job. Additionally, they mentioned that they have a reasonable rental arrangement and are content to put 25-30% of their earnings into Bitcoin each month.

In this case, the primary risks would mainly be the possibility of the price of BTC dropping drastically and not recovering in the near future, or having their holdings stolen if they store them in a hot wallet.

Staying employed would be essential in order to make payments on the loans.

Potential Rewards of Taking Out a Home Loan Using Cryptocurrency as Collateral

“It appears that you have the means to take this chance. A victory could very well alter your life. If the BTC doesn’t reach more than $35K in the next three years, it would just mean another year of work. The risk is worth it, congratulations to you OP,” posted user “Kakoyiannaros”.

Do the potential rewards of taking out a home loan using cryptocurrency as collateral outweigh the risks?