Bitcoin Loan Backtest

Calculator
About
Tap to choose your local currency
Fee incurred when selling Bitcoin to make loan payments
Compare with Traditional Loan

Backtest Results

Initial Loan
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Total Payments Made
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Final BTC Value
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Your Bitcoin (Loan Paid)
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Date BTC Price BTC Owned Payment BTC Sold Portfolio Value

About the Bitcoin Loan Backtest

The Bitcoin Loan Backtest allows you to see how a "Bitcoin-financed loan" strategy would have performed historically. This tool helps you visualize the potential benefits of borrowing money to buy Bitcoin and then gradually selling small portions to pay back the loan.

Historical Performance Analysis

Best Historical Periods for Bitcoin-Backed Loans

  • March 2015 - March 2019: Initial BTC price ~$250, peaked at $19,000, ended at $4,000. Even with the 2018 crash, loans initiated during this period performed exceptionally well due to the low entry price.
  • March 2019 - March 2023: Starting at $4,000, through a peak of $69,000, ending around $28,000. Despite high volatility, the low entry point made this period highly profitable.

Challenging Periods

  • December 2017 - December 2021: Starting near the $19,000 peak, enduring a multi-year bear market. Loans initiated at this point required selling more BTC during the $3,000-6,000 range to make payments.
  • November 2021 - Present: Initiating at the $69,000 all-time high would have required selling significant portions of BTC at lower prices to maintain payments.

Key Insights

  • Entry price is crucial - loans taken during bear markets historically performed best
  • Longer loan terms (4+ years) helped weather market volatility
  • Lower interest rates significantly improved outcomes by requiring less BTC sold for payments
  • Bear market loan payments required selling more BTC, but often led to stronger long-term positions

How It Works

The calculator simulates the following scenario:

  1. You take out a loan for a specified amount in your chosen currency
  2. You use the entire loan amount to purchase Bitcoin at the historical price
  3. Each month, you sell just enough Bitcoin to make the monthly loan payment
  4. A selling fee (default: 0.5%) is applied when converting Bitcoin to fiat
  5. At the end of the loan term, you own the remaining Bitcoin outright

Considerations

This backtesting tool is for educational purposes only and not financial advice. Past performance is not indicative of future results. Some important considerations:

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