The Profitable Alternative to Selling Your Bitcoin

It is widely understood that selling Bitcoin can result in a potential loss of value for several reasons. First, depending on the timing and jurisdiction of the sale, you may be required to pay long term capital gains taxes (10-20% in the USA) if your holdings have appreciated. Short term capital gains taxes can be substantially higher. Second, once converted into fiat currency, the value that was previously stored in Bitcoin becomes susceptible to inflation (monetary debasement, ranges between 2-7% per annum in USA). Lastly, the opportunity cost of not holding Bitcoin can be substantial. Bitcoin tends to make its most significant gains in short bursts, and missing these critical periods can result in missed financial opportunities.

That said, there are times when accessing the value stored in Bitcoin becomes necessary, whether for personal expenses or other needs. Rather than selling your Bitcoin and exposing your stored value to the abovce risks, a likley more efficient approach is to borrow against your Bitcoin by using it as collateral for a USD loan. Companies like Unchained Capital and Ledn offer such services. While the interest rates may initially seem high, it is important to note that, assuming Bitcoin continues to grow at or near its historical compound annual growth rate (CAGR) of 55%, you can potentially roll over the debt continually. This strategy allows you to retain your Bitcoin exposure while still accessing liquidity. Even if you do not roll the debt over continually, delaying payment by a year can lead to huge cost savings due to the inflationary discount and asset growth.

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