Editor's note: In this opinion piece, Xapo Bank's Product Manager Piotr Bedkowski shares his perspective on why Bitcoin-backed loans represent a strategic alternative to selling your Bitcoin when you need liquidity.
In the world of Bitcoin, one mantra has consistently proven its worth: HODL. The philosophy of holding onto your Bitcoin through market fluctuations has rewarded long-term believers with extraordinary returns.
But what happens when life requires liquidity? Whether it's purchasing a home, funding a child’s education, or seizing an investment opportunity, there comes a time when most Bitcoin holders face a critical decision: sell their Bitcoin or find another way to access capital.
Enter Xapo Bank’s Bitcoin-backed loans – the sophisticated wealth preservation strategy that's changing how seasoned Bitcoin holders manage their finances.
With Xapo you can borrow up to 40% of your Bitcoin’s value with zero fees. Your cash arrives in under a minute, ready to use through debit cards, bank, or crypto transfers. Choose from 30, 90, 180 or 365-day terms with low-interest APR, no minimum instalments, and repay anytime in USD or BTC with no penalties for early repayment.
Using 1 Bitcoin worth $90,000 you can borrow $36,000 in US Dollars
Use your Bitcoin, realise your dreams
It's a concept the wealthy have used for generations with traditional assets like property or stock portfolios – think Lombard loans. They could borrow cash against their assets, without selling them. Now, this powerful financial tool is available for your bitcoin holdings.
We're focusing on helping our bitcoin holders access substantial liquidity without disrupting their investment. You’re looking for significant capital to make major life moves.
We call it super collateral. You’ll call it a smarter move.
Bitcoin is one of the best forms of collateral ever created – and we’re not just saying that. It’s highly liquid, always-on, globally recognised, and not tied to any one company or economy. It’s the kind of asset private banks dream of, but until now, it hasn’t been easily usable for securing loans.
With Xapo, you can borrow up to 40% of your Bitcoin’s value in US dollars for up to one year. Instantly with no credit checks. Just secure, simple liquidity using what you already own.
Maybe you’re buying a house. Maybe you’re investing in a business. One person used 120 BTC for a home in 2020. Today, that same property would’ve only cost 5 BTC. The lesson? Selling Bitcoin too soon can cost you far more than you think and you may never be able to buy back the same amount of Bitcoin:
The decision to borrow against Bitcoin rather than sell may come down to a simple comparison:
Expected Bitcoin Appreciation Rate > Loan Interest Rate = Borrow
With Bitcoin's average annual return over the past decade exceeding 45% (despite volatility), and Xapo Bank's competitive interest rates on Bitcoin-backed loans, the mathematical case for borrowing is compelling for long-term holders.
Why sell an appreciating asset when borrowing against it keeps your portfolio intact – and growing?
USD vs BTC. Why holding your investments is often the best strategy.
It's time to rethink liquidity
For seasoned holders who understand the long game, selling their bitcoin should be the last resort, not the first option. Borrowing against your assets provides the flexibility to meet life's demands without compromising your investment future. It’s the smart way to access the value you’ve patiently built.
Let’s make it simple:
You can maintain your long-term Bitcoin position and benefit from potential future growth. Selling could mean missing out.
Access cash almost immediately with no lengthy application reviews or credit checks. Your loan is based on your collateral's value.
Enjoy potential tax advantages as borrowing isn't typically a taxable event like selling can be (check your local jurisdiction).
Take advantage of our highly industry-leading interest rates on Bitcoin-backed loans.
Repay on your schedule, partially or fully, anytime within the loan term with no minimum monthly repayments required and no penalties for early repayment.
Avoid disrupting your asset allocation strategy by keeping your portfolio intact instead of selling.
Getting started with Xapo Bank
Ready to stop selling and start unlocking your BTC’s power? It’s time to rethink what your Bitcoin can do for you.
If you hold Bitcoin in your Xapo Vault and need liquidity without selling, exploring a Bitcoin-backed loan is straightforward (you can also watch our video on how to do it):
Log into your Xapo Bank app
Navigate to the Loans section from your dashboard
Review your pre-approved borrowing capacity
Select your desired loan amount and term
Receive instant funding to your USD account
Our Customer Success team is also available 24/5 to discuss personalised strategies for larger loan requirements.
