Seamus Roca, CEO of Xapo Bank, stated that Bitcoin holders have become more receptive to the idea of borrowing against their digital assets, with increasing market confidence and price stability.
In an interview during the Token2049 event in Dubai, Roca explained to Cointelegraph that the price of BTC staying around $95,000, along with accelerated institutional adoption, has changed investor behavior from short-term speculation to a long-term investment perspective.
He added: 'Three or four years ago, this confidence did not exist, but today people feel more comfortable borrowing against Bitcoin, as we are far from forced liquidation levels.'
Xapo Bank launched a product on March 18 that allows eligible individuals to borrow up to one million dollars secured by their Bitcoin, without the need to sell it.
Growing demand for liquidity without selling the asset:
Roca described Bitcoin-backed loans as 'the next logical step', driven by a shift in the overall tone towards the market and increased long-term confidence in digital currencies.
He pointed out that the new products provide borrowers with flexible options for loan-to-value (LTV) ratios at 20%, 30%, and 40%.
He said: 'If you own 100 Bitcoin, you can get several million dollars without liquidating any asset, especially at a conservative LTV ratio like 20%, which does not expose the asset to liquidation unless the price drops below $40,000.'
Maintaining exposure to markets in times of need:
Roca confirmed that the product meets the needs of investors facing emergency expenses, such as medical bills or car repairs, without having to sell their assets at a suboptimal time.
He explained that:
'Borrowing against Bitcoin allows you to maintain your market exposure and benefit from price increases later, while simultaneously obtaining the liquidity you need.'
As the market matures and institutional adoption increases, Roca sees more long-term investors shifting from the inflexible HODL approach to a more flexible and dynamic use of their digital assets, enhancing Bitcoin's position as an asset that can be utilized without the need to part with it.