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Joined 3 months ago
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Cake day: May 13th, 2024

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  • Banks do have strict risk requirements (i.e. Basel III), in terms of what they are allowed to do with money, and are stress-tested on a regular basis. However, the type of scenario OP is posing would mean every bank would need to write-off their loans, and hope they have capital invested in other places to keep them afloat.

    Since banks have these capital at risk requirements, the government feels comfortable to guarantee accounts up to a certain amount, as every bank going down at the same time is generally speaking a very unlikely event. So usually they would cover the account, take over the bank (if needed), put it into administration, and wind-down positions to claw back money to cover the insurance claims.















  • I’m not sure how much the bitcoins compare to your overall wealth, but it’s generally ok to put 1-5% into high-risk ventures. Bitcoin is worth something at the moment, because people trust that it is worth something. It doesn’t matter that you can’t really use it for anything at the moment (i.e., it’s not more efficient for transactions, or moving money across borders, and you definitely can’t eat it, or make anything with it). Given that major institutions and retirement accounts (and even countries) are investing in bitcoin via ETFs or directly, you could say that there is a level of trust in bitcoin that it will maintain & increase in price.

    Long story short, it’s ok to have a small portion of your overall portfolio in a high-risk/high-reward venture. So you may consider keeping some of it in bitcoin, and converting the rest into low-cost index funds.