The crypto market has had an interesting three months since the re-election of Donald Trump as US president last November. His promise to make America the "crypto capital of the world" has seen the price of Bitcoin continuously rise to new highs, apexing at $109k on the day of his 20 January inauguration.
There is no denying that the new pro-crypto president has kickstarted a new dawn for digital assets. By hinting at plans for a Bitcoin strategic reserve, speeding along the resignation of the Securities and Exchange Commission's chair Gary Gensler, and launching his own $TRUMP meme coin, the 47th US president has opened up a new horizon for crypto whether he's entirely welcomed or not.
With the global crypto market cap expanding by more than 40% to $3.1billion in just three months, 2025 promises to be an interesting ride for crypto newcomers and long-time HODLers alike. According to a prediction round-up by Forbes in January, some experts believe that the Bitcoin price could rise between $185,000 to $250,000 by the end of the year, driven by spot ETFs, greater corporate adoption, and more favourable regulations.
What's more, with the recent bull market moving increasingly in favour of Bitcoin maximalists, demand for crypto-backed loans have become more popular as more people look to leverage their digital assets without selling them.
Just last month Coinbase reintroduced its crypto-backed loan service in the US (minus New York), allowing users to borrow up to $100,000 in USDC with Bitcoin as collateral. According to a recent FT report, the Bitcoin loan market is projected to expand from $8.6bn to $45.6bn by 2030, reflecting a growing appetite among investors to leverage their Bitcoin holdings.
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So just how do crypto-backed loans work?
It's simple – you use your 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. For instance, with a 50% LTV, if you pledge £400,000 worth of Bitcoin, you can borrow £200,000. Once you repay the loan, your Bitcoin is returned to you. For example, in one of our cases we assisted an ultra-high-net-worth individual in securing a non-recourse crypto loan on their Bitcoin, with an LTV of 50% on an open revolving facility. This ensured that the client could use their cryptocurrency holdings as collateral to access a flexible line of credit.
Why consider this option?
This method provides liquidity without forcing you to sell your crypto. It's especially useful if you anticipate that Bitcoin's value will rise over time. By borrowing against your crypto, you can access cash for various possibilities—like for personal liquidity of real estate ventures—while still benefiting from potential future gains in your Bitcoin holdings.
Benefits of crypto-backed loans
Crypto-backed loans offer several advantages. They provide liquidity without requiring the sale of assets, allowing individuals to meet financial needs while anticipating potential asset appreciation. Additionally, crypto loans often come with more flexible terms compared to traditional loans, including quicker approval processes and fewer credit checks. This flexibility makes them an attractive option for those seeking immediate access to funds. Our Securities-Backed Lending broker, Charles Bailey, comments:
"One of the most significant advantages of crypto lending is the potential for high returns. The lenders we have access to offer attractive terms, significantly higher than traditional banks."
Risks of crypto-backed loans
As with everything related to crypto – volatility can strike at any second. If the market crashes – which happened when Trump decided to impose tariffs on Canada, Mexico and China earlier this month – you could lose your collateral quickly. It's best to borrow conservatively, watch LTV ratios, and choose lenders with strong security and transparency. It's important to stay informed on the crypto market and watch for ever-changing geopolitical events that can have devastating effects. With crypto, the key is to always DYOR – that's do your own research.
Still want to borrow against crypto? Here's how to get started
- Choose a reputable platform: Look for established firms that offer service around crypto-backed loans. It goes without saying, Enness is connected to a wide selection of crypto specialists across the globe that include blockchain-based lenders, private credit funds and private niche banks. These options provide access to liquidity without the need to sell your crypto investments. While crypto loans in the UK are a growing industry, Enness can assist with accessing crypto financing in every region.
- Understand the terms: Familiarise yourself with the LTV ratios, interest rates, and repayment schedules.
- Secure your loan: Deposit your Bitcoin or chosen token as collateral and receive your funds.
- Repay and retrieve: Once you've repaid the loan, your crypto is returned to you.
Final thoughts
Crypto-backed loans have emerged as a practical solution for individuals seeking liquidity without giving up their crypto holdings. As the cryptocurrency mortgage market continues to grow and evolve, these loans offer a flexible and efficient way to access funds, reflecting the increasing integration of digital assets into the broader financial ecosystem. With crypto, the key is always understand and access the benefits vs the risks for your own circumstances, and to DYOR - do your own research.
At Enness, we arrange high-value crypto finance for individuals seeking to borrow againts cryptocurrency assets. Talk to a crypto expert today.
Enness does not give advice on Securities Backed Lending or investments (or Luxury Asset Financing), and lender introductions are unregulated. This guide is for information and illustrative purposes only and nothing contain within should be construed as advice or a recommendation and is not an invitation to buy or sell securities.
Islay Robinson, a founder of Enness, is widely regarded as one of the UK's leading mortgage brokers. He has been instrumental in delivering some of the most complex and high value mortgages in the UK.
