Maximize Wealth with Crypto.com: A Guide to Smart Borrowing

Utilizing Debt to Build Wealth

Most individuals harbor a dislike for debt, and understandably so. However, this aversion often hinders their path to wealth.

In stark contrast, the wealthy often view debt as a powerful tool. They adopt a mantra known as Buy, Borrow, Die, as highlighted in a recent Wall Street Journal article. Instead of being forced into loans, the affluent leverage debt strategically over their lifetimes to accumulate wealth. You can adopt this mindset as well.

The quicker one overcomes the mental stigma attached to borrowing, the sooner they can attain genuine financial independence. It's crucial to understand when to borrow and how to effectively utilize debt.

In essence, the objective is to borrow against your assets at opportune market moments, enabling wealth growth while reducing tax liabilities. This approach can revolutionize your financial journey.

This is the strategy employed by astute real estate investors to build extensive property portfolios.

In the realm of cryptocurrencies, several reliable firms have emerged, such as Crypto.com, BlockFi, Celsius, and Nexo, allowing users to secure loans against their crypto holdings.

On Crypto.com, this feature is termed Crypto Credit.

Sign up for Crypto.com here (referral code ‘col’) and receive $25 worth of free CRO upon application for a Ruby Steel card or higher. Enjoy up to 8% cashback on everyday purchases, along with complimentary access to Spotify, Netflix, Amazon Prime, airport lounges, and more! Additional details can be found here.

In this article, I will: - Explore how to enhance your wealth like the ultra-rich. Don’t sell, borrow! - Provide insights on how to do it via Crypto.com; - Share my personal strategy.

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Leveraging Debt Wisely

Many investors harbor a fear of debt—and rightly so. Mismanagement of debt can lead to rapid financial losses.

For example, the majority of traders incur losses by entering the market during euphoric rallies, buying at peak prices, and panic selling later. This classic mistake embodies the buy high, sell low mentality.

Engaging in margin trading can worsen this situation, leading to quick account liquidation.

In contrast, seasoned investors have mastered their emotions and repeat successful strategies. They statistically buy low and sell high more often than the opposite.

Wealthy individuals take this further by minimizing sales to steadily increase their wealth while reducing tax burdens.

Instead of cashing out to secure profits—thereby incurring capital gains taxes—savvy investors opt to borrow against their investments, allowing their portfolios to expand.

In the crypto market, they may take out loans in times of market fear, acquiring stablecoins to invest in Bitcoin, Ethereum, and other cryptocurrencies. Such loans are particularly appealing in the current low-interest climate.

Importantly, they do not sell any part of their original investment, avoiding any realized gains that would incur taxes.

Crypto.com Loans

With Crypto.com, you can obtain an instant loan against the assets in your Crypto Wallet through the Crypto Credit feature.

Remember to sign up here (referral code ‘col’) to earn $25 when you apply for a Crypto.com Ruby Visa card or higher.

For more information, refer to this article that outlines the various wallet types on Crypto.com: Crypto, Earn, Credit, and Fiat.

There’s no deadline for repaying your debt—no banks to hassle you. You only need to manage your loan interest and keep an eye on your market risk. More on that to follow.

Step 1: Borrow

Choose specific assets in your Crypto Wallet to act as collateral for your loan.

For instance, if I have 0.1 ETH (valued at $290 at the time of writing) in my wallet, I will use the entire amount as collateral, allowing me to borrow half the value of that collateral.

So, I could borrow $145 worth of USDT, BTC, ETH, or CRO.

It’s wise to borrow stable assets to invest in higher-risk assets. Therefore, let’s borrow $145 in USDT stablecoin.

My 0.1 ETH will now reside in the Crypto Credit Wallet, while my 0.05 ETH worth of USDT will appear in my Crypto Wallet. Fantastic!

Step 2: Buy

Let’s utilize my borrowed USDT to acquire more crypto.

Suppose I use the USDT to purchase an additional 0.05 ETH.

In essence, I leveraged my 0.1 ETH collateral to acquire another 0.05 ETH, thus expanding my portfolio.

Step 3: HODL

I will now wait for the value of ETH to rise. My principal (0.1 ETH) remains secured in my Crypto Credit Wallet, which helps mitigate the temptation to overtrade.

Step 4: Sell & Profit

Imagine that after 12 months, the value of ETH has tripled.

I can then repay my stablecoin loan with a third of the borrowed 0.05 ETH (plus some interest), netting an additional 0.1 ETH in profit.

In other words, I’ve doubled my ETH holdings without touching my initial investment. No realized gains on my principal means no taxes owed. Remarkable!

Repeat this process, and witness your portfolio grow over time through the strategic use of debt.

My Personal Strategy and Risk Management

The cornerstone of using debt in financial markets is risk management.

It’s vital to borrow at appropriate times to avoid approaching your loan's liquidation price. The goal is to secure loans during periods of extreme market fear, where a sustained price reversal is most likely.

Most margin traders fail because they incur debt during the worst times—especially during periods of market greed.

For instance, if you engaged in a 10:1 margin trade to buy BTC at its peak of $69k, you would face liquidation at $62k. Many traders experienced this unfortunate scenario. Conversely, if you took a ‘lightly leveraged’ 2:1 HODL position, you could endure a drop to $34,500. You might feel anxious about the market conditions today.

Only incur debt when market conditions are favorable.

Avoid borrowing during market greed, no matter how strong the FOMO may feel. Don’t become another liquidation statistic.

Regarding my strategy on Crypto.com, the focus is on leveraging its extensive ecosystem for synergistic advantages.

Here’s a simplified yet illustrative example.

Wait for the market to plunge into peak fear. For example, when BTC falls 50% from its all-time highs. Use some crypto in your Crypto Wallet as collateral to borrow stablecoins and purchase more BTC or altcoins, depending on your risk appetite.

While waiting for prices to rise, store your borrowed crypto in your Crypto Earn Wallet to earn regular interest.

As illustrated, there’s a synergistic benefit between Crypto Earn and Crypto Credit.

Taking out loans through Crypto Credit provides essential capital, while Crypto Earn enables you to grow that capital—even when prices are stagnant. Brilliant.

Ready to dive into the Crypto.com ecosystem?

Sign up for Crypto.com here to earn $25 worth of free CRO when you apply for a Ruby Steel card or above. Enjoy up to 8% cashback on your daily purchases, alongside free access to Spotify, Netflix, Amazon Prime, airport lounges, and more! Find out more here.

To summarize, don’t shy away from debt.

Strategically leveraging debt is a proven method that the ultra-wealthy employ to amass substantial wealth.

Have a fantastic day!

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