Bitcoin holders are becoming more comfortable borrowing against their crypto as market confidence grows

According to Seamus Rocca, CEO of the Gibraltar-based private bank, Xapo Bank.

The CEO of Gibraltar-based private bank Xapo Bank says that Bitcoin (BTC) is seeing an "obvious" next step with the emergence of lending products.

In an interview at the Token2049 event in Dubai, Seamus Rocca told Cointelegraph that with Bitcoin hovering around $95,000 and showing signs of institutional adoption, the mood among investors has shifted from short-term speculation to a more long-term outlook. This makes them more comfortable borrowing against their crypto.

On March 18, Xapo Bank launched a lending product that allows users to borrow US dollars using their Bitcoin as collateral. With the product, qualified clients can access up to $1 million in loans while keeping their BTC.

Bitcoin-backed loans are an “obvious” next step

Rocca said that growing confidence in crypto’s long-term trajectory had fueled demand for the product. This has been 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.

He said this shift is the key to unlocking demand for borrowing against BTC, as investors feel more secure and feel that sharp price drops are less likely to happen.

The Xapo Bank CEO said that its Bitcoin-backed loans offer loan-to-value (LTV) ratios of 20%, 30% and 40%, giving borrowers flexibility while managing risk. “If you get a 20% LTV loan and you have 100 Bitcoin, as a lot of early adopters do, that’s still a couple of million dollars you can borrow without having to sell them,” Rocca said.

With conservative LTV levels like 20%, Bitcoin must fall below $40,000 for borrowers to get liquidated. “We’re nowhere near $40,000,” Rocca told Cointelegraph, pointing to the current price stability as a reason for growing borrower confidence.

Related: Blockchains ready for institutions, lawyers hesitate: DoubleZero CEO

Borrowing helps investors avoid selling in emergencies

Rocca said Bitcoin-backed loans provide a solution for holders who want to stay exposed to BTC when facing life’s unexpected expenses. “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,” Rocca said.

“But life gets in the way,” Rocca added. He told Cointelegraph that unexpected costs, like medical bills or replacing a car, often force investors to liquidate assets at unfavorable times. Rocca said that instead of selling Bitcoin for a $10,000 expense, investors could borrow against their holdings while simply paying interest on the loan.

“You continue to have the upside potential of the price appreciation of the Bitcoin because you haven’t sold it,” he said. “But you get liquidity to pay for things that you need in everyday life.”

As institutional adoption deepens and the Bitcoin market matures, the Xapo Bank executive is betting that more long-term holders will be ready to tap into crypto liquidity without selling their BTC. This marks a shift from the “hodl” culture to an age where Bitcoin owners can do more with the asset.