The problem with borrowing against coin is that all lenders- even those advertising no rehypothecation with deposit transparency- require custodianship of your precious.

In the case of ie Unchained, the third party multisig participant is essentially a senior co-borrower that'll sign your funds away should a catastrophic issue like bankruptcy arise.

It's been shown time and again that:
0) custodied funds are as good as gone until withdrawn. Sure, not all custodians are equal
1) you are the yield
2) no insurance, bailouts, takebacks. With luck, settlement plus fee duration-depreciated fiat equivalents are provided years later. This seems subject to change if a bigtimer incumbent like an ETF issuer gets truly hosed by a leading exchange at some point
3) mark to market loans (all natively advertised products currently available for coin???) are dicey with the regularly irregular volatility all know and love- sans extreme overcollateralization (see point 0)

Which is more nightmare inducing?
A) Liquidation
B) "Safe" overcollateralization  

If one borrows against a home, the lender doesn't get keys to rent a room on airbnb, nor the ability to foreclose should relevant taxation authorities deem the property 30% less valuable than last quarter for 2 minutes on a Sunday night. They can repackage your loan for other bets, but that's an unrelated 2008-level enchilada


With natively marketed lending rates (12-15%+), it might make more sense to assume home equity credit, a structured loan, or even uncollateralized debt [credit cards] which often provide similar or lower rates, and then skim price appreciation within cap gains for deleveraging where opportunistic, at least until mark to market scams aren't the only game in town and/or rates become more reasonable. They can't take your coins and there's no liquidation risk. Hell, they can't force delinquent serfs to pay back anything without court action.

PS- it may even be possible to deduct loan interest when exceeding applicable cap gains limits

I just can't imagine it dragging on very long. Covid recession was like what, a month? Shit is now more leveraged than ever, even a month long recession could mean complete destruction. They'll print and they'll print hard.

I appriiciate the input.  And counterparty risk is the biggest problem with my idea I can think of.  And it is part of my calculation.

However, I would say the two lenders I mention have distinct differences from scams like Celcius.  First I am not depositing to earn yield which is an obvious ponzi.  I would be depositing and PAYING them yield.  It is a collateralized loan.  Ledn is 7 years old, and Strike is about the same age... the latter is run by a long time Bitcoin advocate.  So as you say "I am the yield".  But in this case that is the whole point of why it works for both parties.

But those details might reduce risk, but not eliminate it entirely.  The counterparty risk is still there.  I would just say not as bad as something like Celcius or BlockFi.  And the risk extends beyond the company itself...  it extends to the custodian (probably CB in LEDN's case... maybe Strike too) as well as governments etc.

And your suggestion of other assets to borrow against, or even credit cards is in my thought process too.  It does not really matter where the money comes from as long as I can borrow as much as I need for a decent (hopefully much better than double digits) rate.

For 14 years I have held bitcoin ONLY.  I have not left in on exchanges (99% of the time... and that 1% bit me), or the poker site where I earned most of it.  And I am not keen on loaning it to a custodian.

The reason I want to solve this problem is the hurdle rate of almost any sort of loan is easily overcome by the BTC CAGR.  Of course considering it keeps going etc etc...

Combine this with the ability to buy puts against IBIT, say... make the opportunity very appealing.

Explanation
Chartbuddy thanks talkimg.com

Most of my reason for writing my post was to respond to your previous post in which you seemed to have been proclaiming that some people do not deserve to whine about bitcoin core or various aspects of bitcoin's code on the basis that they did not know enough, and I was proclaiming that anyone can participate, so you seem to be backing off of your earlier claim(s).


Yeah, but part of the reason I keep proposing bets is because guys are ongoingly proclaiming extreme things, and I am trying to get them to actually stand behind what they are proclaiming, and hardly anyone even engages in regards to the proposed bet, yet still continue to complain and propose things that they seem to be too afraid to stand behind with an actual bet.  I am not even betting very extreme, yet I am making a proposal that the various naysayers should be willing to stand behind - such as whether the top is already in or whether the BTC price is going to ever dip below $80k and reasonable things like that, so they should be able to stand behind their proposition and take the opposite side of my proposed bet....

It is like some of the whining is that:  "I used to think that $135k or greater was guaranteed, and now I am starting to feel less than 50/50 in regards to ever getting a new ATH this year blah blah blah.

And, by the way, if there are proclamations that the bear season has started, we better fucking at least get down to $80k or below, since we hardly even had a pump, so if the prices stay above $80k then it becomes quite difficult to be proclaiming that we are in bear season even if BTC prices go back below $100k and stay there for 6 months or longer.

Sure, it is reasonable to also assert that my definition of bear market is too strict... since I would at least want to go below the 100 week moving average, which is currently at around $80k and I would also want to get within about 30% or so of the 200-WMA (which is currently almost $54k - so 30% higher would currently be around $70k.

I will admit that maybe I am being too strict about what constitutes a bear versus a bull market, even though I am willing to bet against what I consider to be unbacked whining claims rather than anything the guys who are saying them are willing to stand behind.  


I don't know what is being assumed beyond bitcoin is not going to go up and/or bitcoin is going to go down.. and/or the bull market is over..

Which macro factors are necessary, besides various monetary policies around printing of dollars?  
even those things are somewhat ambiguous in terms of why anyone might be assuming the bear market to have had started whihc is that the top is in for bitcoin for this cycle, even though our last top of $126,272 on October 6 was ONLY a mere 11 days ago.
 

I agree on that assertion.
 

The powers that be also frequently want us to be afraid and uncertain... especially normal people rather than their various rich friends, and frequently they seem to want their rich friends to be afraid and uncertain too.


noobs should not give too many shits about the price, and if you are a noob, then you should be happy if the BTC price is either falling or slow in its going up. so you can spend 4 years or more focused on accumulating bitcoin, which is a process that should be done with ongoing buying, since selling is surely an uncertain way to build your stack and may well end up backfiring and leave you with way less bitcoin than if you had stayed concentrated and focused on ongoing  buying of bitcoin.

Surely, some newbies are going to be able to front load their investment by injecting way more capital in the first 4 years, yet most newbies are not really able to front load their investment in any meaningful way, so they have to just keep accumulating as their income comes in, which surely seems to be a situation in which either flat or down prices should be welcomed, even though surely it can feel better for BTC prices to go up, it is not really helpful to the stacking journey of an overwhelming majority of newbs, whether they realize it or not.


Of course, no need to respond to each point... Whatever works for you.

Personally, I think that there are ways to formulate price-based and/or time-based sustainable withdrawal methods in such a way that the dollar value is always going up, so even if the BTC quantity is going down, the withdrawal is at such a rate that the dollar value of the holdings is going up faster than the amount that you are withdrawing.. which is part of the reason that I assert that it is sustainable, which means the same as perpetual, which means the same as forever.. not that I am trying to be overly pedantic about this, but just trying to make it more clear based  on our being in an open thread.


Fair enough about avoiding capital gains, yet I personally think that if we are valuating our holdings based on the 200-WMA - which is my suggestion, then the method already reduces variance since so far in bitcoin's history the 200-WMA has ONLY gone up... so it is pretty damned steady.

But, yeah, selling does not really reduce capital gains to the extent that we might be going over the exempted amounts.


I get worried about the extent of losing control over the coins, in terms of the contract, but yeah, if it is only a small fraction of your coins, such as less than 25 % in my earlier example (in which I assumed a total quantity of bitcoin that was 20 BTC, and using 15 for sustainable withdrawal and using the other 5 for some loan) then it might be workable.

I have not seen any of the loan programs that excite me, such as if I were to pay less than 10% in interest and fees, then maybe I might start to become interested in such products... perhaps... but even the example that I gave, if there was a loan that was using 5 bitcoin, then perhaps only a couple of the coins would be used, and the rest would be collateral.


Your roughly going through the numbers don't really inspire me to want to even look into loans, since probably there are going to need to be rates that are at least less than 10%, and maybe I would not be happy unless they were close to 8% or lower.


I hardly given any shits about bears anymore, which perhaps the price-based withdrawals on the way up seem to largely take care of those downside insurance kinds of of matters..  Even in my time-based sustainable withdrawal, I suggest at various points that extra BTC can be withdrawn based on how high the spot price gets from the 200-WMA., so then by the time the BTC price gets more than 4x higher than the 200-WMA, then my self-guidance allows the withdraw up to 23 months in advance rather than merely withdrawing monthly... and of course, with me, everything is a ladder, so there are various points along the way that extra months are authorized to be taken out.  I am not sure if it completely protects downside, since my price-based sustainable withdraw can also provide money for selling on the way up and then being able to set numbers upon which you might buy back, if the BTC price goes back down...not in a trading way, but instead as a kind of downside insurance, like you said.


I get scared by the complication of the matter, yet if you are able to clearly outline various terms, then you can account for the costs and determine if it is worth it, and surely you can start out practicing with smaller amounts, and maybe you will come to realize that it is not worth it to overly complicate matters, especially since bitcoin is already designed to pump forever... and you can calculate the pump forever into whatever kinds of sustainable wthdrawals that you choose to employ along the way.


Surely I have frequently considered that there are three stages, so once we got through accumulation and maintenance stages, then we are in liquidation (or sustainable withdrawal) stage, and if we have accumulated enough or more than enough then we should not be worried about our bitcoin stash going down as long as the dollar value continues to go up.  i think that measuring the dollar value in terms of the 200-WMA gives a more accurate assessment of the dollar value going up and/or if we might be depleting our BTC holdings too rapidly. I don't consider it necessary to continue to build the BTC stack size as long as we always stay in over accumulation status, and surely we should be able to know whether we have gotten there and how much extra BTC we have.  

If our BTC stash is just 5% to 50% greater than our threshold level, we might not feel as comfortable as if our bitcoin might be 3x, to 5x to 10x or more greater than our threshold target level, and yeah of course, I recognize that it is difficult to speak in terms of abstracts which was the reason that I had given the example of the $80k per year income (and the 14.833 bitcoin) as my earlier examples... and yeah you can double or triple it.. if your are talking about $160k or $240k per year... or cut it by half if you ar talking about $40k per year.

If we are working with examples, then we can see where there might be contention points, and surely I am having trouble recognizing that the bitcoin stash has to stay stable or to grow once we have entered into sustainable withdrawal and I don't see any need for it, since sustainable withdrawal should be able to last forever, including a 7% per year increases in the dollar amount withdrawn.. what more is needed or required?  The employment of the financial instruments such as loans and/or puts seem to be just fun things to play around with, yet I don't see how they are helpful unless you are considering that you have not accumulated enough bitcoin.


I think that a lot of us have already gotten to a point that our bitcoin greatly exceeds our needs, so we merely have to protect it so that we are not adding to our withdrawal rate based on losses.

And, let's say with the $80k example, you were to have less than the 14.833 bitcoin, such as you ONLY have 12 bitcoin, and you had been acting like you are a big baller, but you are really not quite at the rate that you need, and so you can either choose to put off your withdrawing for a few months or you could withdraw at a lower rate, such as withdrawing at $60k rather than $80k until your stash size meets the minimum level for that $80k withdrawal rate.. so if you were to ONLY have 12 BTC, then you could wait around 6-ish months once the 200-WMA reaches and/or exceeds $66,666, then at that time your BTC holdings will have had crossed into being valued at $800k based on the 200-WMA valuation and then be able to sustain an $80k per year income... right now the 200-WMA is going up around $50 per day.. so it could take more than 6 months at the current rate for the 200-WMA to get to or exceed $66,666.

Right now, with the 200-WMA ONLY at slightly less than $54k, 12 bitcoin only currently supports about a $64.8k annual withdrawal rate..


The low in the 2020 crashening, as you likely recall, was down to $3,800, so right now we are about 28x higher than that price (since we are at $108,360). Maybe some folks consider current prices to be too high and a correction is needed, yet I continue to have my doubts about how low bitcoin can go, even if we end up getting down from here.  Going below $80k is possible, yet I am still willing to bet that it does not..

Anyone? Anyone?  

I will keep this bet open until we go below $95k, then I might start to worry that $80k might not stand.. right now, we are still at $108,360 as I type this post.  (Edit.. .Added note.. I am not going to change my post, yet I will recognize that my asserted BTC price did not age too well.  since about 25-ish minutes after the post, we have a further dip down to $106,931.. so my earlier price assertion is no longer valid for the specifics of the calculation that I was making, even though the idea still stands, more or less).


Many people believe that it is just quibbling to get all worked up about whether or not the actual private keys are held by oneself rather than being held by someone else and/or even there might be several hops, since they may well consider that bitcoin that has a yield is better than bitcoin that has no yield, so their greed is likely fogging their vision into thinking that custodied bitcoin is better than boring on chain bitcoin that has no bells and/or whistles.

Explanation
Chartbuddy thanks talkimg.com

Exactly! That’s the harsh truth many still overlook. Wrapped Bitcoin might sound like innovation, but in reality, it’s just rehypothecation in crypto clothing. You’re basically handing your BTC to a custodian and getting a “receipt” token back, one that only holds value as long as that custodian stays honest, solvent, and operational. Bitcoin was meant to free us from that kind of system. It was built so that you become your own bank, not so that we recreate banks with fancy smart contracts. It’s funny when people say, “WBTC brings Bitcoin to DeFi,” but what it really does is bring trust-based risk back to Bitcoin. You can’t audit their reserves directly, and if that middleman ever fails, it’s not “decentralized finance” anymore, it’s just “decentralized dependency.” Sure, it might serve some short-term purposes like liquidity and bridging between ecosystems, but let’s be honest, when you wrap your Bitcoin, you’re wrapping it in risk. So yeah, the comparison stands strong, "Wrapped Bitcoin is to Bitcoin what paper gold is to gold",  a representation, not the real deal and at the end of the day, the same old rule applies, "Not your keys, not your Coins, Not your Bitcoin, not your freedom".

Thanks for all the valuable input there, greatly appreciated thoughts from you!

But could you elaborate a bit on the above, last point (asking for a friend ofc..)?

What makes you say this? There's no "hacking" long random numbers.

The last time Bitcoin was sold for $25k was 2 years ago.

I always tell myself 30% drops are normal on the way up.

The 4 year cycle was based on Bitcoin halving and thus less sales from miners. That difference it makes literally gets cut in half every 4 years, so there's no reason for those cycles to continue forever.

It literaly screams for an aggressive BTC rebound.


x.