PinkCat said:
I'm in a similar boat
@cryptofriendly
I've missed to sell in all the cycles so far, in the long term that played put nicely, but there is some opportunity cost for sure.
I have decided to never sell mostly appreciating asset like btc and eth but I do borrow against it.
However I"m not doing the 90% you suggest as a way to sell 10% off the top, but at healthy collaterial levels, so ideally i don't get liquidated.
I use the funds which are not taxable (great additional benefit) to fund businesses and as of recently some RE in Dubai as I like the city and don't mind spending more time there. Yes the RE market there is crazy right now and have signs of mania, but analyses are mostly favoring continued but slower increase and also everyone there offers payment plans ( 60% during construction, 40% on handover is the most common) so you can use that additional leverage without dealing with banks.
A lot of people put 20% downpayment for a property, and as soon as the overall price of the property rises with 20% they sell, making 100% on the money they put in. I'm more of a long term guy since my portfolio is risky enough as it is, but just giving an example.
What attracted me about this market is the relatively high passive income from renting (long term 6-9%, short term 9-15%, depending on ton of factors)
so here is something that certain people mind find cute
1. stake ether, currently passive yield of 3.5%
2. BUT you can borrow against it at 3-5%, considering you will borrow maximum 30% of the collaterial value, you are basically at negative interest. So you are getting paid to borrow
3. Use those money to buy RE with short term rent income of 10%+
result, you keep the appreciating asset and have double passive yield on it WITHOUT generating a taxable event by outright selling.
example:
1. You have $3M of staked eth at 3.7% yield (current rate at lido) generating +$111000 per year
2. you borrow $1M DAI against that eth at makerdao at 7.16% (damn they have increased it, used to be 5.25% until recently) costing you -$71600 per year
so you are ahead $39400 from this borrowing exercise while keeping the appreciating asset and not creating taxable event AND having a healthy collaterial ratio
3. You then by RE for that $1M that makes you 10% net (possible right now in Dubai with short term rent, that % is after the management company fee, so it's passive net 10%) giving you $100k per year
result $139k really passive income per year for every $3M worth of ETH you have or 4.63% while keeping the upside potential and not owing any taxes unless you want to self report you property in Dubai to your home government and pay the income tax on the $100k
Not great, but not terrible either and not long ago the stETH yield was 7%+ and borrowing against it at 2% so was even better.
Also somewhat balancing your risky crypto portfolio with some real estate
open to suggestions for improvement
🙂
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