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Paying Down Debt

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The School of Hard Knocks has likely taught you one of the four decision-making approaches used to pay down or pay off debt. Armed with this knowledge, you are ready to fiscally lead your household or your company down a path which will only be wrong about 75 % of the time.

Debt can be good. It builds credit, allows expansion, closes gaps, and funds education. Too much debt, conversely, can plague a family budget or a company. Once you have made the decision to reduce debt, this short guide will assist you in determining how to best accomplish your goal.

In very simple terms, to reduce debt you must first be able to pay all of the minimum payments on each debt and other monthly expenses. After that, additional “debt reduction” funds must be available to apply to one of the debts with the intention of eliminating it. Additional funds can either be in a large lump or in smaller sums over time. The size of the pot of money is less important than the process. A larger pot will help you reach your debt reduction goals faster; but, a smaller pot, used correctly, will still take you in the proper direction.

The question becomes: If you have multiple debts (say… a property mortgage, vehicle loan, and credit card), which do you pay off first? There are four decision-making approaches that help you identify which should be paid first: Interest Rate Approach, Balance Approach, Cash Flow Approach, and Risk Reduction Approach.

Interest Rate Approach:

Demagogues of modern mythology have, most likely, taught you the first of the four approaches through magazines & trade journals or on the radio & television. Pay down the debt with the highest interest rate. Thus, if the mortgage has an APR of 7.4% while the vehicle loan is 6.0% and the credit card is 5.5%, choose to pay debt reduction funds toward the highest interest loan – the mortgage.

The reasoning of this approach is sound and the math is simple. It is not wrong; it is just incomplete as it represents only one tool in your toolbox to be used when your goal is to reduce total interest paid. And, just as a hammer is a wonderful tool, it doesn’t help much to remove a screw or cut a board in half.

Balance Approach:

The beauty of debt reduction is the snowball effect which allows future debt reduction payments to be much larger than starting payments. Once you pay off the first debt, all else being equal, you can now add the monthly payment you were paying on that debt to your original debt reduction payment, both of which can now be applied to the second debt. The Balance Approach, then, guides you to pay down the debt with the smallest balance left on the loan when your goal is to reduce the number of debts owed. Thus, if the balance on the mortgage is $258,000, the vehicle loan is $3,500, and the credit card is $8,000 – pay off the vehicle loan first. This will allow you to combine the payment you were paying on the vehicle loan plus your additional debt reduction payment toward the next debt – either the mortgage or the credit card.

Cash Flow Approach:

The only consistent thing in life is “change.” Just as you must be flexible in life, you must strive to add greater flexibility to your finances. The Cash Flow Approach teaches to reduce the loan that will reduce monthly cash flow; meaning, the amount that you must pay each month as the sum of all your minimum payments. Mortgages and vehicle loans are often installment loans, so even if you make a large payment above the minimum this month, you will still owe the same minimum payment next month. On the contrary, credit cards, credit lines, and interest only loans adjust their monthly payment amounts based on the balance due. So, if the minimum monthly payment on the mortgage is $2,100, the vehicle loan is $650, and the credit card is $200 – pay toward the credit card first.

As the credit card balance is paid down, the minimum payment amount will go down causing less cash to flow out of your finances. This allows the most flexibility should things turn for the worse, opportunities arise, or plans change.

Risk Reduction Approach:

Lenders categorize debt based on risk exposure and so should you. Even though your plan may be to totally eliminate all debt, plans change. Sometime in the future you may once again find yourself before a lender seeking another loan, maybe to refinance a loan at a better interest rate. Chances are good this will happen before your total debt elimination plan is fully realized. Prepare now for that likelihood by paying off high risk debt first to reduce your overall cumulative risk so lenders are more likely to grant you that future loan.

Lenders first categorize debt as “secured” and “unsecured.” Secured debt is backed by collateral that the lender can repossess or foreclose upon should you cease to keep up your end of the bargain. This can be complicated as lenders further categorize secured debt based on the value of the collateral, how the collateral normally appreciates/depreciates, and the ability to resell it. For this reason, a well-maintained building is better collateral than undeveloped land, and both are better than a vehicle which, in turn, is better than a boat. The better the collateral, the less risk associated with the debt. As you might suspect, unsecured debt is uncollateralized. It has nothing to back it up except your word that you will repay. Unsecured debt is, therefore, the most risky debt.

Following through with the above example, using the Risk Reduction Approach – pay off the credit card first, followed by the vehicle loan, and then the mortgage.

The Best Approach for You:

As you can see, each approach can produce a different answer as to which debt to reduce first. Unfortunately, just as there are no magic wands, there is not a best approach. All four approaches have great merit and can produce the “right answer.” In the end, it is you who must decide the prudent financial management solution to meet your goals. Run through the analysis using each tool. Lay out the results for your particular situation. Balance what you find against your personal strengths and weaknesses while weighing in possible future scenarios. Then, make a decision! No decision you make to reduce debt will be wrong, it will just minimize your total interest paid, reduced the number of debts owed, add greater flexibility to your finances, or prepare you to seek another loan. Whatever decision you make, make it today.

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Bitcoin Diamond Hands: Despite Recent Fear, Coins Aged 12-18 Months Rise To 2-Year High

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Bitcoin Diamond Hands: Despite Recent Fear, Coins Aged 12-18 Months Rise To 2-Year High

Despite the recent fearful market, Bitcoin hodlers show diamond hands as coins aged 12-18 months touch a 2-year high.

Coins Matured To 12-18 Months Revisit A High Not Seen Since 2 Years

As pointed out by an analyst in a CryptoQuant post, BTC hodlers have held strong recently as coins aged 12-18 months have seen a sharp spike recently.

The relevant on-chain indicator here is the Bitcoin Sum Coin Age (SCA) Distribution that shows the distribution of coins among the different holders in the market.

The metric works by looking at each coin on the chain and measuring how many days it has been since it was last moved. Based on the age, these coins are put into different categories.

For instance, if a coin has been sitting still since 12-18 months ago, it is included in the 12-18 months holder group.

When the distribution of the long-term holders goes up, it means accumulation has been strong recently. Such a trend has usually been bullish for the price of Bitcoin as it shows a large number of holders refuse to sell at the current levels.

On the other hand, when coins belonging to short-term holders move up, it means some long-term holders have decided to sell. This trend may be bearish for the price of the crypto.

Related Reading | Bitcoin Millionaires Are Flocking To This North American Tax Haven. But What Do The Locals Think?

Now, here is a chart that shows the trend in the supply of coins that have matured to 12-18 months (one of the long-term holder groups):

Looks like the value of the indicator has shot up recently | Source: CryptoQuant

As you can see in the above graph, the coins aged 12-18 months have sharply rose recently, reaching a 2-year high. The highlighted region in the chart is around when these holders bought these coins.

This means that these Bitcoin holders have now held strong through multiple all-time highs, the mini-bear period between May-July, as well as the recent fearful market.

Related Reading | Bitcoin Implied Volatility Plummets To Pre-Bull Market Levels: What This Means

Hodlers showing such diamond hands behavior can prove to be quite bullish for the price of the coin in the long term.

Bitcoin Price

Earlier today, Bitcoin’s price crashed below $40k, touching as low as $38k. Since then, the coin hasn’t recovered much yet.

At the time of writing the crypto’s price floats around $38.8k, down 7% in the last seven days. Over the past month, the coin has lost 17% in value.

The below chart shows the trend in the price of BTC over the last five days.

Bitcoin Price Chart

After weeks of consolidation, BTC's price seems to have finally crashed below the $40k level | Source: BTCUSD on TradingView
Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com
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How To Add Bitcoin To The Balance Sheet For Corporations, With Saylor & Dorsey

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Saylor, Bitcoin for Corporations at the MicroStrategy World conference

Is your company ready to buy the Bitcoin dip? Saylor and Dorsey will give you the 411 for free.99. The MicroStrategy World annual conference goes live on February 1st. Learn directly from these two titans of the industry, who have definitely been among Bitcoin’s main proponents and promoters over the last few years. 

Michael Saylor has led by example, buying every dip, and is a constant presence in mainstream media. His interviews are more like classes and the attention they get is outstanding. Jack Dorsey, for his part, left Twitter to focus on Bitcoin. Since then, his Block company announced several projects that’ll definitely strengthen the Bitcoin network.

About the MicroStrategy World conference, the press release promises it’ll be “focused on Enterprise Analytics and Bitcoin for Corporations. World 2022 is 100% virtual, and—for the first time ever—access to all sections of the conference is free of charge.” That’s an unbeatable price.

What Will Saylor And Dorsey Talk About?

The conference has two sides, two different events that showcase MicroStrategy’s duality:

“The Enterprise Analytics event will introduce bold new ways to think about analytics and business intelligence, and showcase organizations who’ve used data as a strategic differentiator. The Bitcoin for Corporations event will explore the various benefits of incorporating Bitcoin into corporate initiatives.”

As you might expect, NewsBTC will focus on the second event. It’s important to say that both Dorsey and Saylor’s companies have Bitcoin on their balance sheet. These two put their money where their mouth is, and then some. In any case, what does MicroStrategy World promise?

“An in-depth discussion on Bitcoin between two visionary voices: Jack Dorsey, CEO of Block, Inc., and Michael Saylor, CEO of MicroStrategy Inc. This session will be followed by a discussion on Bitcoin Treasury with Phong Le (President and CFO, MicroStrategy). Bitcoin for Corporations will also feature live interviews with industry experts from Coinbase, Deloitte, Fidelity Digital Assets, Genesis, Jefferies, NYDIG, Paxos, and Silvergate Bank.”

It’s noteworthy that Fidelity Digital Assets recently shocked the world by predicting more countries and probably a Central Bank or two would add Bitcoin to their balance sheet in the next few years. Christine Sandler, Fidelity’s Head of Sales & Marketing, will represent the company at the conference. 

Saylor ’s Recent Bitcoin History

Since MicroStrategy first added Bitcoin to its balance sheet in August 2020, the company has increased the bet every few months. They issued common stock. They sold stocks. They bought, and bought, and bought, and bought. In a recent interview, Saylor explained the strategy and NewsBTC reported:

“Look, our long term strategy is kind of like Harvard University. We’re running a university but we have an endowment. MicroStrategy is selling enterprise software. We generate $100 million in cash flow a year – in a good year – and we are reinvesting that cash in our endowment. Our endowment is 100% bitcoin.”

Saylor adds that MicroStrategy plans to acquire and hold bitcoin as a balance sheet. As for the operations, the company will continue to sell its enterprise software everywhere in the world.”

Related to this, about MicroStrategy’s free conference, Saylor said:

“We have gained a wealth of experience and expertise innovating our treasury strategy and evolving our corporate bitcoin acquisition strategy. And we’re pleased to be in a position to share our knowledge—via this curated event—for corporations looking to pursue similar strategies and bold initiatives.”

Dorsey’s Recent Bitcoin History

For his part, Dorsey’s strategy is much different than Saylor’s. He’s working in infrastructure. Dorsey’s fortifying the network’s weak parts. Among other things, Block announced they’re building a decentralized Bitcoin exchange called tbDEX. Released the Lightning Development Kit. And announced they’re working in an open-source ASIC miner

On a personal level, Dorsey and rapper Jay-Z put 500 BTC in a blind trust to promote Bitcoin development in Africa and India. And created the Bitcoin Defense Legal Fund to protect developers from all kinds of lawsuits.

BTC price chart for 01/21/2022 on Gemini | Source: BTC/USD on TradingView.com

The Price Of Bitcoin

Despite Saylor’s and Dorsey’s efforts, Bitcoin is bleeding. On one hand, Proof-Of-Stake proponents straight up lied before U.S. Congress in a hearing about Proof-Of-Work’s environmental risks. On the other, there’s a rumor that Russia is considering banning Bitcoin in some capacity. Both of those situations caused panic in the market, and Bitcoin’s price is currently 40% lower than the ATH of $69K. 

Will Michael Saylor buy the dip? 

Featured Image: screenshot from the conference's website | Charts by TradingView

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Stacks Price Prediction 2022 — Will STX Hit $4 Soon?

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Stacks Price Prediction 2022 — Will STX Hit $4 Soon?
  • Bullish STX price prediction is $1.750 to $2.722.
  • The STX price will also reach $4 soon.
  • STX bearish market price prediction for 2022 is $0.514.

In Stacks’s (STX) price prediction 2022, we use statistics, price patterns, RSI, RVOL, and much other information about STX to analyze the future movement of the cryptocurrency. 

Stacks Current Market Status

According to CoinGecko, the price of STX is $1.80 with a 24-hour trading volume of $148,941,041 at the time of writing. However, STX has decreased nearly 13.9% in the last 24 hours.

Moreover, STX has a circulating supply of 1,052,561,461 STX. Currently, STX trades in cryptocurrency exchanges such as Binance, OKX, KuCoin, Mandala Exchange, and Gate.io.

What is Stacks (STX)?

Stacks is a layer-1 blockchain solution that is designed to bring smart contracts and decentralized applications (DApps) to Bitcoin (BTC). These smart contracts are brought to Bitcoin without changing any of the features that make it so powerful, including its security and stability. Stacks is powered by the Stacks token (STX), which is used for fueling the execution of smart contracts, processing transactions, and registering new digital assets on the Stacks 2.0 blockchain. Stacks look to take what makes Bitcoin so powerful, and extend it with additional functionality, without needing to fork or change the original Bitcoin blockchain.

Stacks (STX) Price Prediction 2022

Stacks holds the 64th position on CoinGecko right now. STX price prediction 2022 is explained below with a daily time frame.

STX/USDT Horizontal Channel Trend Pattern (Source: Tradingview)

The horizontal channel trend has the appearance of a rectangle pattern. It consists of at least four contact points. This is because it needs at least two lows to connect, as well as two highs. Buying and selling pressure is equal and the prevailing direction of price action is sideways.

Currently, STX is in the range of $1.80. If the pattern continues, the price of STX might reach the resistance level of $2.670. If the trend reverses, then the price of STX may fall to $1.764.

Stacks (STX) Support and Resistance Level

The below chart shows the support and resistance level of STX.

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STX/USDT Support and Resistance Level (Source: TradingView)

From the above daily time frame, it is clear the following are the resistance and support levels of STX.

  • Resistance Level 1 – $1.750
  • Resistance Level 2 – $2.295
  • Resistance Level 3 – $2.722
  • Support Level 1 – $1.130
  • Support Level 2 – $0.777
  • Support Level 3 – $0.514

The charts show that STX has performed a bullish trend over the past month. If this trend continues, STX might run along with the bulls overtaking its resistance level at $2.722.

Accordingly, if the investors turn against the crypto, the price of the STX might plummet to almost $0.514, a bearish signal.

Stacks Price Prediction 2022 — RVOL, MA, and RSI

The Relative Volume (RVOL) of STX is shown in the below chart. It is an indicator of how the current trading volume has changed over a period of time from the previous volume for traders. Currently, the RVOL of STX lies below the cutoff line, indicating weaker participants in the current trend.

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STX/USDT RVOL, MA, RSI (Source: TradingView)

More so, the STX’s Moving Average (MA) is shown in the chart above. Currently, STX is in a bearish state. Notably, the STX price lies below 50 MA (short-term), so it is completely in a downward trend. Therefore, there is a possibility of a reversal trend of STX at any time.

Meanwhile, the relative strength index (RSI) of the STX is at level 40.22. This means that STX in a nearly oversold state. However, this means a major price reversal of STX may occur in the upcoming days. So, traders need to trade carefully. 

Stacks Price Prediction 2022 — ADX, RVI

Let us now look at Stacks Average Directional Index (ADX). It helps to measure the overall strength of the trend. The indicator is the average of the expanding price range values. Furthermore, this system attempts to measure the strength of price movement in the positive and negative directions using DMI indicators with ADX.

The above chart represents the ADX of Stacks. Currently, STX lies in the range of 19.318, so it indicates a weak trend. 

From the above chart, the Relative Volatility Index (RVI) of STX. RVI measures the constant deviation of price changes over a period of time rather than price changes. The RVI of STX lies below the 50 levels, indicating that the direction of volatility is low. In fact, STX’s RSI is at 40.22 level thus confirming a potential sell signal.

Comparison of STX with BTC, ETH

The below chart shows the price comparison between Bitcoin, Ethereum, and Stacks.

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BTC Vs ETH Vs STX Price Comparison (Source: TradingView)

From the above chart, we can identify the trend of the ETH, BTC, and STX is moving at the same level as the trend. This indicates that when the price of BTC increases or decreases, the price of ETH and STX also increases or decreases respectively.

Conclusion

With continuous improvements in the Stacks network, we can say that 2022 is a good year for STX. For this reason, the bullish price prediction of Stacks in 2022 is $2.722. On the other hand,  the bearish STX price prediction for 2022 is $0.514.

Furthermore, with the advancements and upgrades on the STX ecosystem, the performance of STX would help to reach above its current all-time high (ATH) $3.39 very soon. But, it might also reach $4 if the investors believe that STX is a good investment in 2022.

FAQ

1. What is Stacks?

Stacks is a layer-1 blockchain solution that is designed to bring smart contracts and decentralized application (DApps) to Bitcoin (BTC). 

2. Where can you purchase STX?

STX has listed on many crypto exchanges which include Binance, OKX, KuCoin, Mandala Exchange, and Gate.io. 

3. Will STX reach a new ATH soon?

With the ongoing developments and upgrades within the STX platform, it has a high possibility of reaching its ATH soon.

4. What is the current all-time high (ATH) of Stacks?

On December 1, 2021, STX reached its new all-time high (ATH) of  $3.39.

5. Is STX a good investment in 2022?

Stacks (STX) seems to be one of the top-gaining cryptocurrencies this year. According to the recorded achievements of STX in the past few months, STX is considered a good investment in 2022.

6. Can Stacks (STX) reach $4?

Stacks (STX) is one of the active cryptos that continues to maintain its Bullish state. Eventually, if this bullish trend continues then Stacks (STX) will hit $4 soon.

7. What will be the STX price by 2023?

Stacks (STX) price is expected to reach $5.7 by 2023.

8. What will be the STX price by 2024?

Stacks (STX) price is expected to reach $7 by 2024.

9. What will be the STX price by 2025?

Stacks (STX) price is expected to reach $7.9 by 2025.

10. What will be the STX price by 2026?

Stacks (STX) price is expected to reach $9 by 2026.

Disclaimer: The opinion expressed in this chart solely author’s. It does not interpreted as investment advice. TheNewsCrypto team encourages all to do their own research before investing.

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