The volatile world of cryptocurrency is almost as volatile as its devout followers. As the fervour of crypto continues to spread, its tightly-bound devotees are somehow getting worse. In a new development, crypto believers are taking out loans to bolster their digital wallets.
Why are crypto fans taking out loans?
Reported by the Wall Street Journal, fiscally irresponsible cryptocurrency fanatics are lending money to fuel their obsession. Borrowed from specialist money lenders such as Aave, funds are lent out in either US dollars or the cryptocurrency Stablecoin.
The Wall Street Journal reports that some are lending money to purchase houses and cars. However, others are using the borrowed funds to dump back into Bitcoin, Ethereum and NFTs.
One man, 27-year-old Kris Kostadinov borrowed $14,000. The man immediately funnelled that money into a portfolio of NFTs. Kostadinov claims that his $14,000 loan has resulted in assets worth $60,000.
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Ups and downs
Loans taken out purely to spend on cryptocurrency are as volatile as they come. Much like loans taken to fund stock market purchases, every expense is a huge gamble. One day, crypto could be worth $36,000 per coin, another day it could be half that.
Lending money to funnel into such a volatile market ideal; it’s the opposite of common sense. However, you just can't stop some people from dipping their toes into the water. And once those toes are dipped, it's hard to escape.
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