Upside of holding the collateral instead of selling if you think the bull run hasn’t even started
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This is the correct answer.
It is also typically cheaper to pay the APR than it is to pay cap gains.
13% APR on 100k loan @ 50% LTV means put down 1.818 BTC for the 100k disbursement. Total interest on the 1 year loan is $7,180.73. Loan interest payments are also tax deductible.
If you sold .91 BTC to get the 100k cash then you would owe 15% of your gain. So if your cost basis was less than $52,000 you would pay more in cap gains than interest.
If you took a loan against your sats one year ago exactly you would be up 75%, and that’s the real reason why people borrow against their stack vs selling.
Sounds like the maff checks out.
Sure. Its subjecting 1.818 BTC to custodian risk to save a small difference between APR and cap gains.
I guess my point is thats alot of risk for a very small reward.
The appeal is to possibly capture the 26%+ CAGR of the collateral, assuming the custodian risk doesn't harm anything.
Idt most Celsius users expected Celsius to freeze withdrawals when it did.