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Saylor Junior: A Bitcoin Pleb-Level Speculative Attack

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This is an opinion editorial by Mickey Koss, a West Point graduate with a degree in economics. He spent four years in the Infantry before transitioning to the Finance Corps.

As bitcoinâ€™s price crashes, I found myself thinking about Michael Saylor and his strategic use of debt to outstack basically everyone else in the world. It got me thinking, maybe I could do something similar. A pretty standard dollar-cost averaging (DCA) is a daily buy to the tune of \$20â€“\$25 a day for a pleb on a budget.

The question I had is what it would look like if I were to convert a \$20 daily DCA into a debt payment and bring those future sats into the present.

To compare the two, I got a quote for a personal loan, getting as close to the \$20 a day DCA payment as possible. The actual quote is below.

The price at the time of this writing is \$22,180. Let’s assume a \$25,000 bitcoin price, just to add a little conservatism into the calculation.

At \$25,000, a \$36,000 loan will grant you 1.44 bitcoin. If you multiply the \$605.26 monthly payments by the 84-month loan term, you can see that the loan will cost you \$50,841.84.

If we divide \$50,841.84 by 1.44, we get a bitcoin price of \$35,306.83 for you to break even when compared to the cost of the loan. If you think bitcoin will be above \$35,000 in seven years, this seems like a pretty good deal to me.

A \$20 purchase at \$25,000 bitcoin is 80,000 sats. If we take the 1.44 BTC above, or 144,000,000 sats, and divide it by the 80,000 sat DCA, you get 1,800. This means that at a constant price of \$25,000, it would take you 1,800 days to DCA into 1.44 BTC at \$20 a day, or 4.9 years.

So, essentially, if bitcoin was to stay at \$25,000 or below for the next five years, the \$20 a day DCA strategy is mathematically better. But if you think that BTC will generally keep rising over time, it may be beneficial to convert your DCA into a loan. Even with that 10% interest rate, bitcoin would only need to exceed \$35,000 at the end of the seven-year term for you to come out on top. Honestly, it seems kind of conservative to me.

Michael Saylorâ€™s strategy is starting to look pretty appealing at these price levels. While I canâ€™t, in good conscience, recommend this to anybody, I thought it was an interesting micro example which sheds a little light on where Saylorâ€™s head might be.

Happy stacking. I always love these fire sales.

Just to reiterate one last time: Definitely do not do this. This is not financial advice.

This is a guest post by Mickey Koss. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.

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• Source: https://bitcoinmagazine.com/markets/bitcoin-saylor-speculative-attack

This Post was originally published on Bitcoin Magazine