Seamus Rocca, CEO of Xapo Bank, discusses the increasing confidence among Bitcoin holders to loan against their BTC. The bank’s new product offers loans up to $1 million with Bitcoin as collateral, reflecting a shift towards long-term investment strategies rather than short-term speculation. Rocca highlights the role of institutional adoption in bolstering this trend, suggesting a growing trend in Bitcoin-backed lending as investors seek liquidity without selling their assets.
Bitcoin holders are increasingly finding ways to borrow against their digital assets, according to Seamus Rocca, CEO of Xapo Bank, a private bank based in Gibraltar. Speaking at the Token2049 event in Dubai, Rocca noted a change in market sentiment. With Bitcoin hovering near $95,000 and more institutional interest apparent, investors are shifting toward a long-term perspective rather than focusing solely on short-term gains.
In an era where confidence in Bitcoin’s stability seems to be growing, Rocca pointed out that the current climate allows for borrowing against BTC without the same fears of liquidation seen in previous years. “Three or four years ago, I doubt people would have felt this confident about borrowing against Bitcoin,” he remarked, highlighting how significant shifts in market dynamics are leading to this trust.
Xapo Bank recently introduced a lending scheme which permits users to leverage their Bitcoin to obtain USD loans. Launching March 18, the product allows qualified clients to borrow up to $1 million while still holding onto their Bitcoin. Rocca emphasized this as a logical progression in the crypto space, driven by growing acceptance and demand.
He elaborated that institutional adoption plays a huge role in shaping the mood around Bitcoin. The anticipated introduction of exchange-traded funds (ETFs) and increased adoption rates lend a sense of security. Rocca explained that as the market matures, demand for loans backed by crypto assets rises since investors feel more stable about price volatility.
Offering flexible loan-to-value ratios such as 20%, 30%, and 40%, Xapo Bank allows borrowers to manage their risks effectively. For instance, with a 20% LTV loan, someone holding 100 Bitcoin could access substantial funds without needing to liquidate their assets, even in fluctuating market conditions. Rocca mentioned that with conservative LTV levels, liquidity issues shouldn’t arise unless Bitcoin plummets below $40,000, a level he doesn’t foresee, given the current market fundamentals.
Rocca addressed the need for alternative liquidity solutions, remarking that life often throws unexpected expenses at individuals. He urged against the impulse to liquidate Bitcoin assets quickly during emergencies. Rather than selling to cover, say, a $10,000 expense—and risking missing out on potential gains—investors could use loans against their holdings. They could then manage their immediate needs while maintaining the potential for profit from Bitcoin’s future growth.
As Xapo Bank continues to respond to evolving market demands, Rocca anticipates a greater influx of long-term holders ready to explore functionalities within their crypto assets without resorting to liquidation. This could signify a notable shift away from the notion of simply “hodling” and into an operational approach where Bitcoin serves as a source of liquidity, retaining its investment value over time.
