Can you retire borrowing against your Bitcoin forever ("buy‑borrow‑die")?
Now that nostr:nprofile1qy2hwumn8ghj7etyv4hzumn0wd68ytnvv9hxgqgdwaehxw309ahx7uewd3hkcqpqex7mdykw786qxvmtuls208uyxmn0hse95rfwsarvfde5yg6wy7jqjrm2qp and others like Unchained, Ledn, nostr:nprofile1qyfhwue69uhkcmmrv9kxsmmnwsarwdehxuqjyamn8ghj7mnpwvh8jatwd9jhyun0v3exjem4v4azucm0d5argwp58qhsqgpfzgk72hyql95jr35ywwdjvu4p4ulgezqgys6kafl2yrrzq52jzqmxlfwh allow for relatively easy Bitcoin-backed loans, the question is...
Can you just roll over the debt forever?
That's kind of the goal isn't it? Have Bitcoin appreciate in value over the borrowing cost and roll over the debt and live happily ever after?
Let's see...
Short answer: Maybe. Only if you control five risks – and 12%+ APR makes that challenging.
Risk #1 – Volatility risk
Volatility ≠ risk when you long-term hold but it is with loans! Borrow too much and the volatility can trigger liquidation (margin call anyone?).
Even big names get margin‑call pressure: Newsweek ran a piece on how a deep Tesla price drop could force Elon Musk to sell pledged shares.
Rule of thumb: keep loan‑to‑value (LTV) below 25 %. That survives ~60 % price drops before hitting a liquidation trigger.
Risk #2 – Interest‑rate risk
Bezos and Musk borrow at 2‑4 % because banks love ultra‑liquid mega‑cap stock collateral.
Unfortunately you're not Bezos or Musk, and banks still consider Bitcoin highly risky so you're stuck with high APR's for now (12%+ as of now, though nostr:nprofile1qyxhwumn8ghj7mn0wvhxcmmvqywhwumn8ghj7mn0wd68yttsw43zuam9d3kx7unyv4ezumn9wsqzp382htsmu08k277ps40wqhnfm60st89h5pvjyutghq9cjasuh38q7t6dtc
hinted at sub-double digit offerings).
If BTC returns stall below the rate for a few years, interest snowballs and you shrink instead of grow. I know nostr:nprofile1qyx8wumn8ghj7cnjvghxjmcpz4mhxue69uhk2er9dchxummnw3ezumrpdejqqg9rg869l7t43ats5gdsqrqh6njn5wjf0jpe0unvpekkredvllr6nqwfmhjz says it's 30% ARR but there could be a massively down year that can wipe you out if you get too greedy.
Risk #3 – Refinance risk
Rolling the debt “forever” assumes lenders always renew on friendly terms. In a risk‑off market they can raise the rate or refuse rollover.
In extreme cases, there may not even be a lender available and you have to sell BTC to cover or find highly unfavorable terms.
Risk #4 – Custody / rehypothecation risk
Some crypto lenders re‑lend or rehypothecate your BTC. If they blow up (see Celsius, BlockFi) your collateral can vanish even when price goes up.
Recently, Mallers cleared this up with Strike (no rehypothecation) and others listed above seem to mostly be on the same page but there's still a risk of them losing your BTC in a hack or some other black swan event.
Risk #5 – Regulatory & tax risk
Congress has floated closing the “buy‑borrow‑die” loophole.
New regulations could tighten BTC‑secured lending or change step‑up rules.
The ultra-wealthy can borrow cheap, on very liquid collateral, and usually keep LTV ultra‑low. You, fellow pleb, even with a 10 % APR, would need BTC to have double‑digit returns every single year just to break even after tax and loan costs.
Yes, borrowing is "tax-free" but if you ever have to sell BTC to cover, it will be a taxable event.
So can it work? Yes!
But only at low interest (hopefully soon) and low LTV.
High APR's carry real danger: one bad year of flat or down BTC price plus rising rates can wipe out years of compounding.
If you want to do this: keep borrowing small (≤ 25 % LTV), stockpile an interest buffer, and be ready to shrink the loan quickly when #BTC moons (if it helps you sleep at night).
Not financial advice. Do your own research.
#gm #gn #nostr #plebchain #bitcoin #loans
