Key Takeaways

• Xapo Bank says its Bitcoin-backed loans product is becoming more popular today.

• There is increasing investor confidence among Bitcoin holders looking at their assets’ long-term potential.

• Crypto-backed loans offer holders more to do with their assets than just HODLing.

Xapo Bank has reported a surge in Bitcoin holders borrowing against their crypto assets. The Gibraltar-based private bank launched a Bitcoin-backed loan product last March and has experienced an increased uptake.

According to Xapo Bank CEO Seamus Rocca, Bitcoin holders were more comfortable borrowing against their crypto holdings, highlighting growing confidence in the cryptocurrency market. Rocca was speaking on the sidelines of the Token2049 event in Dubai. At the time of writing, Bitcoin was hovering around $97,036 as the mood among investors shifted from short-term speculation to a long-term outlook buoyed by increasing institutional adoption. Addressing the media, Rocca stated:

“I’m not sure that confidence would have been there three or four years ago […], but today, people are more comfortable to borrow against Bitcoin because we’re nowhere near the levels that would trigger liquidation.”

Companies Reintroducing Crypto-Backed Loan Products

On March 18, 2025, asset manager for long-term Bitcoin holders Xapo Bank announced a Bitcoin-backed loans program offering loans of up to $1 million. Crypto lending took the back burner following a series of high-profile crypto bank collapses that rattled the crypto industry. Nonetheless, the launch of Xapo Bank’s product coincided with a resurgence of crypto-backed loan products, with companies like US-listed Coinbase reintroducing a service they had withdrawn in 2023.

During the launch of their Bitcoin-backed loans product, Seamus stressed the difference between the firm’s wealth-management service and what exchanges generally offer, which is geared towards trading. He stated:

“If an exchange offers you secured lending, it’s to encourage leverage,” Rocca said in an interview. “And the moment you have leverage, unless you’re a professional investor […] and even when you are a professional investor […] the risk of losing money is very high. If you’re an exchange platform, you don’t care about that. You’re just there to facilitate gambling.”

Broader Institutional Adoption

Rocca observed then that there was increasing confidence in crypto’s long-term trajectory, which had fueled demand for Bitcoin-backed loans. He observed that the move was primarily driven by developments leading to broader institutional adoption.

“Expectations are for institutional space coming in, the ETFs, and the mood music on Bitcoin is much more about wider adoption and long-term thinking than very short-term speculation,” Rocca said.

A Solution to BTC Holders

The CEO added that the shift was the key to unlocking demand for borrowing against BTC, as investors feel more secure and that sharp price drops are less likely to happen. He now suggests taking up Bitcoin-backed loans as the solution for BTC holders who want to stay on top of things whenever life’s unexpected expenses face them. He advised that instead of selling Bitcoin for a $10,000 medical expense, investors could borrow against their holdings while simply paying interest on the loan. He stated:

“If you follow the ethos of investing, the smart thing to do would be not to sell it in three days if it goes to $100,000.”

Conclusion

As institutional adoption for crypto deepens and the BTC market matures, the Xapo Bank executive believes taking up Bitcoin-backed loans would help holders tap into crypto liquidity without selling their BTC. If the development takes root, it will shift from HODLing to an age where owners can do much more with their crypto holdings.

Frequently Asked Questions

How do Bitcoin-backed loans work?

It’s simple: holders use their crypto as collateral to secure a crypto loan. Crypto-financing lenders offer funds based on a percentage of your crypto’s value, known as the Loan-to-Value (LTV) ratio.

Why do people borrow against Bitcoin?

One of the main reasons people choose to borrow against Bitcoin is to get quick access to cash without selling their BTC.

How do I use Bitcoin as collateral for a loan?

You move your assets to a platform, request a loan, select the amount and term you want to borrow, accept the interest rate, and sign the agreement (digitally), and it’s done.