7 Reasons Why Crypto Loans are a Good Investment Strategy

Jan 27, 2022
A digital image with text reading "crypto loans as an investment strategy?"

With some of the top financial minds predicting central banks will raise interest rates by a percentage point in 2022, many retail investors are worrying this will affect their finances. A change in interest rates affects how banks borrow from one another. It also determines the rate lenders charge for personal loans, credit cards, mortgages, etc. If the federal interest rate goes up, borrowing becomes more expensive. However, crypto loans stand to be advantageous in times like these due to their decentralized operations. So for those looking for good investment strategies, consider cryptocurrency loans for these seven reasons: 

  1. Crypto loans free up “locked” capital
  2. Cryptocurrency loans don’t require credit checks
  3. Crypto loans help investors buy in desirable markets
  4. Loans help to pay off credit card debt
  5. Crypto loans can improve your credit score
  6. Cryptocurrency loans can multiply your assets
  7. Cryptocurrency loans hedge risk

“Unlock” the value of your crypto with crypto loans 

Look at your crypto wallet. Yes, right now. What do you see? You should see cryptocurrency there. While many of you may be happy with the profits you made HODLing these cryptocurrencies over the years, the numbers you see on your wallet are just numbers. Are you using those profits if you don’t sell them? Nope. You can’t realize profit until you cash out, but who in their right mind would cash out during such a hopeful time for this industry?

There should be more options than hold or sell. Long-term HODLers can unlock the value of their favorite assets. Just look at the graph above. Long-term holder supply is rising, and so is the value of their portfolio. However, using this crypto as collateral means they can keep holding long term while also benefiting from the value of their crypto to get money for real-world investments. Thankfully, that’s very easy to do with crypto loans. 

Say goodbye to credit checks with crypto loans

Traditional lenders are very selective when it comes to choosing a borrower. This makes it hard for anyone with a below-average credit score to enjoy the benefits that loans offer. Not with a crypto loan, though. Cryptocurrency loans don’t come with credit checks. Essentially, as long as you don’t have a criminal record, you can qualify for a crypto loan. 

Even the top minds on wall street use loans as an investment strategy and now, you can too. Just find a lender with a good reputation (e.g. YouHodler), make an account, and get your loan within minutes. 

Crypto loans give investors “ammo” to buy in desirable markets

The area in the red box above shows the Bitcoin (BTC) price since November 2021. While many may see several steep drops in price and several moments of panic, others see opportunity. Smart investors look at every large, red candle like the ones above as buying opportunities. Perhaps you often hear the phrase “buy the dip.” It means to buy more crypto when others are selling, so you can benefit from the price rebounding later (which it always does eventually).

However, how does one buy the dip without any cash? Maybe you already spent all your cash on the last dip and ran out of funds. That’s a pretty normal occurrence. Thankfully, we have crypto loans. Crypto loans allow you to use crypto as collateral for cash so you can buy crypto in desirable markets. 

If you buy every dip, then you start accumulating just as the smart money, institutional investors do. Then when the price goes back later, you will profit much more than those that sat and held their bags. 

Loans help you pay off your credit card debt

Paying off credit card debt isn’t an investment strategy (is it?). Not directly. But the two are closely related. If you can pay off your credit card debt, that frees up more money to invest in profitable assets. Credit card debt is a liability to your investment strategy and should be paid off in full as soon as possible. 

According to CreditCards.com weekly credit rate report, the average APR for new credit cards is 16.13%. That means if you spent $10,000 on a credit card, you’ll have to pay back $10,000 plus an additional $1,613. 

It may seem like a small amount, but if you used that $1,613 to buy Ethereum (ETH) in January 2021 and waited until May 2021, then you would have had over $4,000 instead of paying that to the credit card companies. As a bonus, paying off your credit card debt helps you improve your credit score, opening up the doors for more investment opportunities down the road

Crypto loans can help improve your credit score

If you have a higher credit score, then it’s easier to obtain a mortgage. A mortgage helps you buy real estate. Buying real estate is a good investment strategy. Just take a look at the chart below.

Since 2007, the average price of United Kingdom houses has increased nearly every year (with a few corrections in between). This makes buying real estate a solid long-term investment and it is much easier to do that with a mortgage. However, one can’t get a mortgage with bad credit and the only way to get good credit is to pay off that credit card debt. Crypto loans help with this. 

How to multiply your assets using loans

Assets are like puppies. The more you have, the better it is. Hence, one should always strive to multiply their assets whenever possible. To do this, cryptocurrency loans are unique trading strategies. For example, let’s say you have 1 BTC and want more. Go to YouHodler, use that 1 BTC as collateral for a USDT loan, and use that USDT to buy 0.5 BTC. Now you have 1.5 BTC. More than when you started. Then, when the value of that crypto increases later, you can use the profits to pay off the loan.

PRO TIP! Multiply your crypto automatically using YouHodler’s Turbocharge today

Crypto loans are a hedge against rising interest rates and inflation

Rising interest rates from central banks and fiat currency inflation are two current problems the world is experiencing. Crypto loans are a hedge against such risks. Investors can use cryptocurrency as collateral for instant access to affordable capital. Capital for long-term value investments. Hence, moving funds from an inflationary-risk asset like the EUR or USD and moving it to something more stable and profitable. 

For example, one could use crypto as collateral to buy more crypto that could potentially greatly rise in value over the coming month, offsetting any losses incurred from inflation. Alternatively, funds from a loan could also be deposited in a YouHodler savings account where investors can earn up to 12% APR plus compounding interest 

Are Bitcoin loans a safe investment strategy?

Cryptocurrency loans, like any investment strategy, come with risks. One should always be careful when investing and follow the common tips (e.g. only invest what you can afford to lose, don’t put all your eggs in one basket, etc). Please remember ot always do your own research before taking a crypto loan and make sure the company or person has a trustable reputation. 

Please contact us with any questions about our background, licenses, or team and we will be happy to assist you with your due diligence process. Until then, enjoy learning more about crypto loans and our other features right here on the YouHodler blog. 

Get YouHodler Crypto Wallet App

An efficient and innovative tool powered by crypto-backed loans to help you capitalize on market volatility

YouHodler is regulated in  Switzerland and the EU

Partnership with regulated EU/Swiss payment providers

YouHodler S.A. Regulated Financial Intermediary and Pawn Broker

YouHodler Italy S.R.L. OAM Registration

VASP Registration wth the Bank of Spain