As at the beginning of January 2021 Bitcoin has seen a massive rise in price over the last 6 months – from around £7000 to around £26000having briefly touched £30,000. Lots of people are now looking at the possibility of getting in on the action but don’t have cash at their disposal to invest. So should you get a loan to buy Bitcoin or other crypto-currencies?
The answer has to be a resounding NO. You should only invest as much as you can afford to lose and when you take out a loan, that’s money that you can’t afford to lose. You are still going to need to make the repayments, whatever the value of your crypto.
Having said that its very easy to see the attractiveness of the proposition.
- Interest rates are at an extremely attractive low rate (at least they are in the UK).
- Bitcoin has been on an extensive bull run.
So lets say you borrowed around £7000 6 months ago and bought 1BTC.
That BTC is now worth around £26000 –
Sell your BTC now and pay off the loan and interest (which will be around £250) and you’ve still made nearly £19000 profit.
For some people they will look at that and say getting a loan is worth the risk. The mistake of course is assuming that the price will keep going up in the next 6 months in the way it has for the last 6 months.
IF you could guarantee (which no one can) that the price would rise then of course getting a loan to buy Bitcoin would be a no-brainer! You would borrow as much as you could.
Can you get a loan to buy bitcoin in the UK?
Apart from the fact that this is a very risky proposition, you are not going to find a lender who will loan you money to by crypto currencies. The only way of getting a loan to buy bitcoin would be to say to the lender that it is for a different purpose eg buying a car or home improvements. This of course would open you up to charges of fraud! – So – no don’t get a loan to buy bitcoin!