Hello HODLERS! I hope you all are enjoying the recent market surge and HODLING intact to your coins as you had been for the last two years and so. Today, I am going to tell you a market strategy that can pump your portfolio without any investment and also without much of a risk. I have been doing it for quite a some time now, and thought it to worth sharing.
So let's highlight the smart strategy that has grown my portfolio tremendously and if you pay attention to the next few lines, you can also benifit hugely from it.
"You just need to take loan against your crypto and reinvest it."
Now, you all will say that we already know that. But keep reading because this isn't that you only need to know.
So, what are the other things that you need to keep in mind while applying this strategy. Let's understand it by these follow up questions:
Who should apply this strategy?
Whether you should take a loan against your crypto or not, is the first thing that you should ask yourself. Let' clarify. If you're someone who doesn't want to look at your holdings on a daily basis, this strategy isn't for you. It's because of the fact that sometimes prices go down and your collateral can be at risk of liquidation. To save it from that risk, you need to continuously monitor the loan and it's LTV (loan to Value).
Another requisite for this strategy is that you should be a long term HODLER. This doesn't mean that you can't profit in short term but the profits would not as much as you can have in long term.
So, if you are ready to monitor your crypto loans daily and a HODLER by default, this strategy is for you.
When to take a loan?
Obviously, you can take crypto loans 24x7. But taking a loan when the market is down and comparatively stable is better. Why? Let's understand. As you know Bitcoin has recently been up 40% in a month or so, this isn't the right time. It's because the market correction can swallow the LTV and your collateralised Bitcoin may be liquidated.
I made my first borrowing when Bitcoin was stable around $24k and there was no seemingly no reason that it would fall below $20k anytime sooner. Also I took out the loan when I observed that market conditions are turning bullish. And here I am my LTV is around 50% for that borrowing even after I have removed some of the collateralised asset.
What percentage of holdings should be collateralised?
At most 50% of the total you hold at an exchange. Why not another 50%? It's there to save you in case markets go down after you take the loan. You will need to increase your LTV to save your collateralised assets against the loan. Just to inform you that this hasn't happened with me even once. But who knows, so better be prepared.
Where to get the loan?
Most centralized exchanges offer loans against your holdings. I personally use and would recommend it because of the flexibility it provides. The UI is very simple. You can easily add or remove LTV whenever required. You can also make partial payments. And above all the interest rates are lower in comparison to most other platforms.
Another very good CeFi for loan purpose is Nexo. Nexo has been the most innovative as far as the crypto lending and borrowing products are concerned. On Nexo, however, the LTVs are not same for every asset as on Binance, but the interest rates are much lower if you can hold 10% of your total portfolio in
Which coins to use as collateral?
I personally used a variety of coins including BTC, Ethereum, BNB, MATIC, SOL and Litecoin. It's safe to use high market cap coins as they aren't more likely to fall in double digits in a day. In my personal choice, there are two coins that can do this but I took the risk. I went with SOL and MATIC just because I didn't want to lose even a bit of them 2 months ago. The price for both of them has been much much lower than what their capacity was and I expected them to only jump from there. Luckily, my expectations turned true, and for both of these assets the LTV is way lower than 50%.
Which coins to buy with your loan amount?
I believe that this is the most important part of all steps. It's so because after you do everything correctly and end up putting your extra funds on some garbage, you are going to regret that hugely.
I personally buy only from the Top 10s. For this cycle, I have gone 40% BTC, 20% ETH, 10% XRP, 10% DOT, 10% SOL and 10% MATIC. I'm not entirely against buying a shitcoin or a new coin that has potential. I also buy them but I do it with my own funds only in small amounts. But when it comes to buying with the loan amount, I don't get greedy and only buy high cap coins.
Should we remove LTV if we get a chance?
Yes, you can. I also do it but with caution. Remember, you need to repay the loan in case you want to get them back, so it's better you remove your LTV when it's lower than 40%. Also don't remove the whole amount. Only remove an amount where your LTV does not cross 60%.
In a case with Solana and MATIC, I removed some LTV and took another loan with that amount. This is very interesting as when you get to remove around 20% of your collatoral, just remove it and borrow another amount while collateralising at higher rates.
So friends, this is my strategy to increase my portfolio. Strictly my strategy, not to be taken as financial advice. Kindly do your own research before making a financial decision.
Important Note-If you like this strategy, start with small amounts and 50% LTV. At BINANCE you can even borrow $1 and reinvest it as I mentioned above. Try this, It's absolutely amazing and with so less a risk. Also, these are loans which you can take when you need money but you don't wanna sell your dear crypto.
If you like this strategy, please tell me in the comment box with any of your suggestions.
As Always Thanks for Reading and Tipping
Adios ... Ciao.... Bye ... Take care ...
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