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Experiment: I took a Three Month Loan to buy Bitcoin – Part 1

I took a loan of Rs. 200,000 to be returned in three months, to buy Bitcoin with it and see if I make profit or loss at the end of three months. The total amount to be returned is 209069, roughly 5% more.

While we always advise people that taking a loan to invest in Crypto is a terrible idea. But many people don’t listen to this advise, go knee deep in debt and lose everything, even the faith in digital money.

I decided to take the leap to understand if I can turn profit or make a loss in short term by buying BTC on borrowed capital. The loan is for three months, hence there will be three more articles, one for each time I repay the loan.

Here are the details:

Loan to buy Bitcoin, charges and Repayment Schedule

The loan is taken on my MoneyTap Credit Card. Using the card, I can get the money immediately in the bank account for use.

Loan AmountRs. 200000
Processing FeesRs. 4000
GSTRs. 720
Monthly Payment68116.30 (Total Repayment: 204348.9)
Loan Start DateJune 12, 2020
To be paid beforeSep 11, 2020

I borrowed the money from credit card on the day which was the last day of payment for the previous bill, hence the first EMI will have to be paid on or before July 11, 2020, exactly one month from now. Similarly the last installment can be paid until September 11, 2020.

I will be paying an interest of ~5% overall, so if the final value of INR on the BTC is above 210000, I will be in profit.

Bitcoin Purchase Details

I purchased BTC from an Indian exchange by depositing Rs. 200000 into the exchange and buying BTC with it. I moved the BTC to my private wallet and I will withdraw the funds needed each month to repay the loan.

Bitcoin Purchased0.2766
Fees for transfer0.00018251
Total BTC Balance on June 21, 20200.27641673
BTC Purchase Price (adjusted with fees)~Rs. 723500

Follow Part 2 for what happened next.

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