Bitcoin Saylor’s Speculative Attack – Bitcoin Magazine
This is an opinion piece by Mickey Koss, a West Point graduate with a degree in economics. He spent four years in the infantry before moving to the Finance Corps.
This article is not financial advice – just a financially illiterate psychopath doing the math.
As the price of bitcoin plummets, I found myself thinking about Michael Saylor and his strategic use of debt to outperform virtually everyone in the world. It got me thinking, maybe I could do something similar. A fairly standard average cost to purchase (DCA) is a daily purchase of $20-25 per day for a low-budget pleb.
The question I was wondering was what it would look like if I were to convert a daily DCA of $20 into a debt payment and bring those future sats back into the present.
To compare the two, I got a quote for a personal loan, coming as close as possible to the DCA payment of $20 a day. The actual quote is below.
Pricing at the time of this writing is $22,180. Let’s assume a price of $25,000 in bitcoins, just to add some conservatism to the calculation.
At $25,000, a $36,000 loan will get you 1.44 bitcoins. If you multiply the monthly payment of $605.26 by the loan term of 84 months, 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 against the cost of the loan. If you think bitcoin will be above $35,000 in seven years, that sounds like a pretty good deal to me.
But what about DCA?
A purchase of $20 to $25,000 in bitcoins corresponds to 80,000 sats. If we take the 1.44 BTC above, or 144,000,000 sats, and divide it by the 80,000 sats DCA, you get 1,800. This means that at a constant price of $25,000, you would need 1 800 days for DCA in 1.44 BTC at $20 per day, or 4.9 years.
So essentially, if bitcoin were to stay at $25,000 or lower for the next five years, the $20 a day DCA strategy is mathematically better. But if you believe that BTC will generally continue to rise over time, it may be beneficial to convert your DCA into a loan. Even with that 10% interest rate, bitcoin would only have to exceed $35,000 at the end of the seven-year period for you to come out on top. Honestly, that seems a little conservative to me.
Michael Saylor’s strategy is starting to look quite attractive at these price levels. While I can’t in good conscience recommend it to anyone, I thought it was an interesting micro-example that sheds some light on where Saylor’s head might be.
Good stacking. I always love these sellouts.
Just to repeat one last time: definitely don’t. This is not financial advice.
This is a guest post by Mickey Koss. The opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.