Borrowing money to buy crypto currency is a high risk trade and not something I recommend for anyone.
However, there is a way to get long-term leveraged exposure to the Bitcoin price with a totally limited downside.
It doesn't involve fancy derivative products or complex instruments and you don't have to know anything about how to buy and sell Bitcoin.
Here's how to do it.
One of the biggest Bitcoin Bulls is a chap named Michael Saylor. He runs a company called MicroStrategy. It's a software as a service company and produces plenty of free cashflow every year.
Saylor has sold hundreds of millions of dollars in corporate bonds ( at very low interest rates) to purchase Bitcoin because he considers it better than cash.
Public reports state that MicroStrategy (Ticker: MSTR) has 114,042 Bitcoin at an average price of USD $27,713. With Bitcoin now trading in excess of USD $60,000 those holdings are worth in excess of USD $6.7 billion.
Although MSTR has borrowed money to purchase (and hence is leveraged) the capital is not repayable for years and hence there is no 'margin call' or forced liquidations within that time.
If I am correct in my Bitcoin pricing roadmap, the value of the MSTR Bitcoin holdings will rise multiple times from here.
So, buying MSTR stock is an indirect but significant exposure to the Bitcoin price without having to manage a wallet or go through a coin broker. You can just buy the stock on the NASDAQ market through most online brokers.
The stock is currently trading at around USD $750 per share.
DISCLOSURE: I own Bitcoin directly and also own MSTR stock. My average purchase price of the stock is USD $650
DISCLAIMER: None of this is to be deemed financial advice of any kind. This is my opinion only and you should seek professional advice in respect to any investments you make.
Cory Bernardi is the author of seven books and has been a member of the Australian rowing team, a publican, an investment portfolio manager and spent nearly 14 years as an Australian Senator.
