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Yes, you have to be carefully not to get margin-called, from what I've seen most people that have over 10M+$, tend to borrow up to 25-30% of their collateral's
by rawtxapp 5y ago
Yes, you have to be carefully not to get margin-called, from what I've seen most people that have over 10M+$, tend to borrow up to 25-30% of their collateral's value (for example[1], this person borrowed 82M$ using 228M$ worth of collateral).
1: https://defiexplore.com/cdp/9167 https://defiexplore.com/cdp/9167
- user-the-name 5y agoThere is no way to be "careful not to get margin-called", since crypto markets are heavily manipulated in order to force margin calls. Trading on margin on crypto markets is a fool's game.
- rawtxapp 5y agoNotice that borrowing != trading on margin, you can certainly buy back into the asset, but you can also do lots of other things with the money. You can be careful with your borrowing, like the example I gave, in that case, Bitcoin would need to drop by 50% before that person get's liquidated and even if that happens, they still have the 82M$ in cash.
- TuringNYC 5y ago>> You can be careful with your borrowing, like the example I gave, in that case, Bitcoin would need to drop by 50% before that person get's liquidated and even if that happens, they still have the 82M$ in cash. Not quite...now you still owe capital gains tax on the forced liquidation price (minus cost basis)! So perhaps a large part of your $82M draw goes into taxes.
- devoutsalsa 5y agoYou're making me think that maybe I shouldn't have sold puts on DOGE, levered myself up 20x, and wait for it to go to the moon. There's no way I can lose!
- babyshake 5y agoAt least in a bull market, it seems safe to assume that an asset like BTC or ETH will not suddenly decrease by over 50%.
- user-the-name 5y agoIt is definitely not safe to assume anything in the incredibly corrupt and manipulated cryptocurrency markets.