Bitcoin backed loan questions

Hey everyone, let’s talk about Bitcoinbacked loans. Specifically, questions from one of my followers in Iceland. I didn’t realize it until recently, but I have people that follow my work in Koala Lumpur, Malaysia and Iceland, and I I’ve just got people messaging from Australia, uh, messaging me questions, asking questions, and all of that, thanking me for my content. So, good to hear. Makes me feel good. So, glad my uh my stuff is being valuable to people. So, I’m going to read through some of the communications from this individual and answer his questions live. Then I will send this individual a link uh to the live video, but I figure rather than do this just for him, I might as well do it for everyone all at the same time. So, he opens up uh says he’s from Iceland, thanks me for the breath of fresh air for my content, says there’s not much for local meetups. He’s kind of on an island over there by himself. Um and has some questions about Bitcoin backed loans. So, back at $97,000, he took out two Bitcoin backed loans uh for, you know, a relatively st substantial amount. And initially, he had sent me uh the the loan, you know, loan liquidation prices, which were $49,000. Both of them were just under $50,000. My feedback was that’s cutting it too close. um when we’re bouncing around between 58 and 62, if I had loan liquidation levels down uh just under 50,000, I would add more collateral. I just would. Now, I’ll get to some of his follow-up questions uh in a minute here, but in my case, the I have two Bitcoin backed loans, one on one for $10,000 on Coinbase, one for $10,000 on um Strike. And one of them has a liquidation level of like 34,000 and the other has a liquidation level of like 24,000. I mean, they’re just ridiculously low. So, what I tell people with Bitcoin backed loans is, you know, you need to try to get your liquidation level to half of whatever the lowest price you think Bitcoin’s going to be. Um, now, if you run if you run some math of like worst case scenarios, I mean, you really can’t end up with anything below like $28,000, but that’s really crazy. Again, that’s less than half of I mean, that’s half of 56. like that. It just you end up with nonsensical numbers, which I do think you can get up the the liquidation level on a Bitcoin backed loan so low that you can basically forget about it. But I don’t know what that level is. Um, but I’m going to walk through some of the pros and cons of different levels here. Uh, first, how low do I think Bitcoin will go in this price cycle? I talked about this before. Nobody knows. Um, there’s, let’s call it a 50% chance that 58,000 was the bottom. uh Micro Strategy, uh Michael Sailor, they raised an extra billion dollars last week to shore up their balance sheet. So that should eliminate any fears that people had about solveny and those fears were not well placed anyway, but uh even though they were not well placed to start with, uh that extra billion dollars should anybody still talking about Micro Strategy being, you know, having issues, they never had issues, but now they have 1 billion dollars less of issues. So give me a break. Um but anyway, but I’ll talk about different levels, but uh given the fear, uncertainty, and doubt that should have been eliminated from the market by uh MSTR, Micro Strategy, the company strategy, raising the extra billion dollars last week, uh a good chance that 58,000 was the bottom, which was like last week, I think, anyway, or maybe the week before, whatever. 58,000. Uh so I think there’s a 50% chance that was the bottom. If that was not the bottom of the remaining 50% I think 40 of the remaining 50% chance is that the bottom’s between 54 54 and 58 which leaves a 10% chance that the price goes below 54,000. Now if it does go below 54 thou,000 again vast majority of probability is 45 to 54. I mean you just your probabilities getting are start getting really really really really you know shallow. So, if somebody said, “What’s really the lowest I should have to worry about for a Bitcoin back loan?” I would say is if your liquidation level is below 42, you’re probably fine. Now, you’ll probably notice that I was not talking about Bitcoin back loans at 116 or 105 or 97 or 95. At 95,000, I was selling my gold and silver to buy more Bitcoin, which I’m still glad I did. Um, but I didn’t start talking about Bitcoin backed loans until the price was in the 80s. And even when the price was in the 80s, I said I would never recommend anyone do them unless the price is below 75. Now, I broke my own advice and I got like a Bitcoin back loan at like 82 or 83,000, which I ultimately paid back when Bitcoin went back up to like 8283. Um, but I just wanted to participate. The market was dropping. I wanted to do something about it. And I took out a $10,000 Bitcoin back loan. And then when the price came back a couple weeks later above 80 83,000 I liquidated it for basically the same price I paid for it. But then I took out two new Bitcoin back loans at 87 and I think sorry not not 87 sorry 67 at 67 and I think the other one was at 63. I think I have one on Coinbase and one on Strike and I think I took one of them out at 67 and 63. Um, well, if you followed my advice, again, I don’t ever recommend people invest borrowed money, but if you’re investing borrowed money, um, and you kept it below 75,000, then your liquidation prices should be in the, let’s call it low, you know, it should be below 42,000. So, uh, even if you said, hey, Joel said he might take back out of Bitcoin back loan at 75 and then you actually did that, your liquidation level should be in the low 40s already. If it’s not, it requires relatively little collateral to top it up and get push that liquidation level below 42,000. Um, which is probably as low as it needs to be, honestly. Um, again, I I like to use round numbers and just say pick the lowest number you think it’ll go and drop that in half, you know, but realistically, if somebody took me a Bitcoin back loan and said, hey, I’m sitting here just under 50, I would say that’s probably cutting a little tight. like I would probably add more collateral or you know at least you know leverage the auto topping up feature to make sure or something like that. If somebody came to me and said my my LTV you know is you know whatever it is but it’s the liquidation level is you know 41,800 I’d say you’re probably good. I mean, that wouldn’t that doesn’t mean I wouldn’t be ready to do something, but like I mean, you’re just the the the the the bell curve of the chorus on Twitter right now is around 43,000. And what you know is that they’re always wrong. So, in a bull market, the bell curve of it with the price predictions are always too high. And in a bare market, the predictions of the bell curve are always too low. So, if the if the if the the peak of the bell curve of predictions on Twitter right now is 43, that means there’s a good chance 58 was the bottom because they always are off and they’re always off by a substantial amount. So, for example, in 2022, the bottom was 15,500 and the bell curve was probably 11,800. You had a lot of predictions between 10,000 and 13,800. I mean, just a ton of people predicting 12,800, whatever. and they were just way off. I mean, they were just substantially off. So, it feels the same way right now where, you know, there’s too many people calling for $43,000 Bitcoin, which probably means the bottom was 58, just like back then there was too many people calling for 10 or 12,000 Bitcoin, which meant the bottom was 15,500. They just are always I mean the thing you can be guaranteed about Twitter and all social media is in a bull market they’re going to overpredict the top and in a bare market they’re going to you know underpredict the or they’re going to overpredict the bottom meaning you know undersshoot uh the actual price. Um so anyway I think anything below 42,000 is probably a safe liquidation level. Uh the higher you get into the 40s the more nervous I get. Not I don’t again I think there’s a 90% chance we don’t ever see you know below 54,000 and I think there’s a 50% chance we don’t ever see below 58,000 meaning we already saw the bottom and we’re past it. We just don’t know and when you’re dealing with debt you don’t want to get liquidated. So, um, anyway, so those those are my thought processes. But if you started getting interested in Bitcoin backed loans as the price fell past 75,000, which is the first time I ever started talking about it was that I would only do it if the price fell past that, then you should have an LTV that uh is below those levels.