Even though you provided some provocative details, I am still feeling that I am missing some important details.
I am presuming that your "friend" took the $60k loan some time in 2024 rather than in 2021?
3x annual income is a lot, so then his payments might have had partially depended on the length of the loan and the interest rate, and some loan require incremental payoff during the loan (such as a car payment or a house payment) and others only require minimal payment and a balloon payment at the end (such as credit card promotional loan dealios).
When the guy is in profits, such as right now with the BTC price being right around double the price at the time of the loan, it is looking like a quite great front loading situation, again presuming the loan originated in 2024 and so presuming that the loan had not yet been paid off, so the payoff might still be running until the loan is completely paid off.
If the loan originated in 2021 and if it was like 5 -6 years or more (like the kinds of loans that Saylor negotiated), then even that loan would have worked out o.k... even though there were better times to buy bitcoin both before and after 2021.
By the way, some consumer loans, such as new auto loans can be ridiculously low at the time of origin, and maybe have a 2% loan that has a 5 years duration or something like that.. but yeah, you have a depreciating car that likely is worth 1/2 as much as the purchase price after a couple of years, but yeah if you are getting cash maybe the next best one would be a home equity line of credit, but still those could be 5% or more, but they could be intended for home improvements, yet they might have liberal requirements if the person has a lot of equity in their home. Personal loans might not be able to get under 6% or even under 5 years.. yet i know that there will be regional variance with these kinds of matters.
Hey... why is friend in quotation marks??
It's a
real friend...!!
Sure. No problem "we" sometimes be like that.
He bought in Feb 2024 at around 50k-60k
His loan is really longterm. 8 years or more. As long as Bitcoin increases by 30-40%, he is fine. And it already did that.
I think he will have done even better in 8 years from now.
What about the interest rate? Sometimes these various "little details" can really be important in terms of making difference between good loans and bad loans.
If you are saying that bitcoin needs to be at least 30% to 40% higher, thenI am going to presume that the interest rate would be in the ballpark of 4-5% (let's say 4.5%), which maybe sounds like a home-equity kind of a loan. And, if it happens to have had been a home equity kind of loan, I would presume that the whole loan is paid down, so there is not a balloon payment in the end.
Let's say that his annual income is $50k, so then his loan would have had been right around $150k... so then if the loan is over at least 8 years (let's actually say 10 years), then the payments would be right around $1,530 per month, which would be $18,360 per year (which is about 37% of his salary). He probably would need a longer term than 10 years to make it reasonable... .. .. but yeah, in light of bitcoin, we love those kinds of loans, and anything less than 6% I would be fine with as long as the person can make payments. I don't really like interest rates that are higher than 6%, even though in some cases they might be warranted.. .. for example , if I were loaning out my bitcoin I would be willing to pay up to 8% to get the cash in advance, but I probably would not loan any more than 5% of my bitcoin under those kinds of terms.
Never stop DCA’ing
Personally, I prefer weekly rather than daily, but sure at that rate of $50 per day or maybe $350 per week, maybe a couple of times a week for the buys would be cool with me to try to buy during dips in the week.
Buying the dip at $115K is a crazy thing to experience. Not going to lie, I thought we would all be flying around in helicopters when Bitcoin hit $4K, so maybe hitting a million is that far fetched. I always thought that if it happened people would be too rich, but looking back I guess I always thought that…
It is funny how redistribution of wealth takes place in a somewhat invisible kind of a way. Some folks take a bit of time, too, to get used to figuring out how to spend their money.
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