In the recent crypto bloodbath, my crypto portfolio was one of those that got wiped out by liquidation. I had over $20K in DeFi with $15K in loans. I was at roughly 60% LTV.
But, the price of CRO started dropping along with the crypto market. I was teetering on liquidation until Crypto.com decided that they would modify their interest rates to "make their business sustainable". CRO dumped immediately, causing me to get liquidated.
All I have left is about $3K in crypto and almost $2K in loan.
You would imagine that I might be a bit salty about the experience. But, it's actually a bit of a relief. The liquidation wiped away $13K of debt.
You might say that I should be upset about losing $20K. It was actually closer to $30K at one point. But, most of it was unrealized gains. I guarantee you that I did not save anywhere near to $30K. I didn't save anywhere near $20K. What got liquidated was mostly capital gains. Despite the market dump, I got liquidated at a profit.
Best of all, I borrowed when the crypto was at a high price and got liquidated at a lower price. Thus, my capital gains aren't as high as they could have been.
Another reason I am comfortable with my DeFi collateral getting liquidated is that crypto prices are cheap at the moment. If I was able to build my portfolio to $20K once, then I could do it again, especially at these prices.
Buying cheap crypto and selling at a profit? I could do this all day, every day. I don't feel like being liquidated was a loss. I got $15K out of it. And, I still have change left over.
Yeah, sure. There is a tax consequence to this. But, you only pay taxes if you make money. And, that's what's great about this. I made money.
And, with this market dump, talk about being blessed with another opportunity.
Now, the tough part is dividing my savings between HBD and other cryptos to start rebuilding my portfolio.