Bitcoin holders are increasingly leveraging their assets to secure loans, a trend fueled by growing market confidence and institutional adoption, according to Seamus Rocca, CEO of Xapo Bank. Speaking at the Token2049 event in Dubai, Rocca highlighted a shift in investor sentiment from short-term speculation to a long-term outlook as Bitcoin stabilizes around $95,000.
Bitcoin-Backed Loans: A Natural Progression
On March 18, Xapo Bank launched a lending product allowing clients to borrow up to $1 million against their Bitcoin holdings. Rocca explained that the lending option offers loan-to-value (LTV) ratios of 20%, 30%, and 40%, enabling Bitcoin holders to access liquidity without selling their assets. “If you get a 20% LTV loan and you have 100 Bitcoin, that’s still a couple of million dollars you can borrow without having to sell them,” he told Cointelegraph.
According to Rocca, the shift toward borrowing against Bitcoin is driven by the perception of reduced risk in the market. “We’re nowhere near $40,000,” he said, underscoring the current price stability that bolsters borrower confidence.
Avoiding Forced Sales Through Bitcoin-Backed Loans
For Bitcoin holders facing unexpected expenses, borrowing against their crypto offers a strategic alternative to selling. Rocca emphasized that Bitcoin-backed loans enable investors to retain exposure to potential price appreciation while accessing liquidity to cover immediate financial needs. “You continue to have the upside potential of the price appreciation of the Bitcoin because you haven’t sold it,” he said.
As Bitcoin gains traction among institutional investors and products like ETFs signal broader adoption, Xapo Bank anticipates increased demand for crypto-backed lending. Rocca views this trend as a significant step toward integrating Bitcoin into mainstream financial services, allowing long-term holders to unlock liquidity without sacrificing their assets.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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