Bitcoin loans are paying for tuition and working capital, not just trades, lenders say

HODL with a loan

The primary motivation for borrowing against BTC is to unlock liquidity from a passive investment without having to sell and lose exposure to the asset.

Albright noted that SALT's core purpose has not changed since inception. "We don’t believe people should have to sell their most valuable assets to get the value out of it," he said.

Ledn’s clients are driven by the same philosophy.

"People borrow against their bitcoin because they believe it will be worth more in the future, and they also want to be certain they'll get it back," Reeds said.

That conviction is also the reason why Ledn’s clients keep renewing their loans.

"Most clients renew their loans, because the whole premise of this type of lending is not selling bitcoin and continuing to hold the position," Reeds added.

According to Albright, financial strategies that the ultra-wealthy and large corporations have used for centuries are finally democratizing. "Now, that is becoming available to a broader group of people based on the asset they own and hold," he said.

Fixed rates are the next push

To solidify this mainstream shift, lenders are moving toward providing predictable costs, with SALT aiming to make crypto loans behave more like traditional mortgages.

"Our ultimate goal is to have loan products behave much more like a mortgage, where someone can take out a loan, at a fixed rate over a longer term and have greater predictability around the cost of borrowing, even while Bitcoin remains volatile," Albright said.