For many Bitcoin holders, often referred to as HODLers, selling their cryptocurrency feels akin to relinquishing something they have cherished for years. The memory of weathering significant market downturns, like the 80% crashes experienced in 2018 and 2022, keeps many from cashing out. Instead, a growing trend among these holders is to borrow against their Bitcoin, ensuring they retain ownership of their assets.
Recent research commissioned by Ledn, a Bitcoin-backed lending platform, reveals that over 88% of digital asset holders in the U.S. and Australia are open to the idea of borrowing against their Bitcoin, although only 14% are currently doing so. This disparity has been termed the “collateral gap,” a striking 6-to-1 ratio between interest in borrowing and actual participation.
Established in 2018, Ledn has successfully facilitated over $10 billion in Bitcoin-backed loans. By allowing holders to use Bitcoin as collateral for loans in U.S. dollars, Ledn offers its clients an alternative to selling their assets. Alongside lending, Ledn also provides savings accounts, a borrow-to-buy service called B2X, and operates a trading desk. It is noteworthy for its compliance with regulatory standards, including SOC 2 Type 2 certification, and its publication of proof-of-reserves. Recently, the platform made headlines by issuing what it claims to be the first S&P-rated Bitcoin-backed asset-backed security, rated BBB.
Further insights from the research highlight the reasons behind the reluctance among non-borrowers. Concerns predominantly revolve around trust rather than a lack of understanding. The foremost apprehensions include managing Bitcoin’s price volatility, dealing with potential liquidation risks, and navigating the regulatory landscape surrounding crypto-backed loans. Comparatively, insufficient crypto holdings ranked much lower as a concern.
Responses indicated that borrowers prioritize trust signals over rates and features. Elements like risk-management practices, the lender’s reputation, clarity of terms, user experience, and proven track records emerged as critical considerations for borrowers.
Mauricio Di Bartolomeo, co-founder of Ledn, stated, “Bitcoin is now held by tens of millions of people, managed by regulated institutions, and covered by major ratings agencies — yet collateralized borrowing against it is still in very early innings compared to any traditional asset class of this size.” He elaborated that while the demand side is robust, the necessary trust infrastructure is still developing.
Those who participate in borrowing typically do not do so for emergency cash but instead view it as a means to leverage their investments. Among users of crypto loans, 62% are utilizing the funds to acquire additional Bitcoin, while a mere 1% resort to selling. This borrowing approach is akin to margin loans in equity markets or home equity lines in real estate, allowing individuals to access cash without divesting their core assets.
Notably, the survey suggested that 72% of respondents believe crypto-backed loans provide convenient access to funds while circumventing capital gains taxes that often arise from selling Bitcoin. The logistics of tax treatment may vary by jurisdiction, but the advantage of borrowing over selling remains a significant factor.
Over the past six years, Bitcoin has consistently outstripped borrowing costs, leading many holders to view interest payments as merely the price of maintaining their investment. This trend is echoed even among affluent clients, with Di Bartolomeo noting that high-net-worth individuals frequently choose crypto-native lending structures not out of necessity but due to the alignment with the operational essence of Bitcoin.
Despite the burgeoning interest in crypto lending, the market remains minuscule compared to traditional financing avenues. Galaxy Research estimates that the broader crypto lending market achieved a record $73.6 billion in the third quarter of 2025, which pales in comparison to the trillions seen in collateralized borrowing against traditional assets. Notably, margin lending in equities constitutes a significant fraction, with mortgages making up a large portion of U.S. household debt. This suggests that the crypto market, despite its massive growth, has yet to see collateralized borrowing scale in tandem with overall asset holdings.
A regional analysis further uncovers a divergence between Australian and U.S. Bitcoin holders. In Australia, individuals tend to adopt a more proactive approach to borrowing as part of their financial strategies, often taking the time to compare various lending platforms. This trend appears linked to the fragmented nature of the Australian market. Conversely, U.S. holders exhibit a more cautious attitude toward borrowing, with building trust and confidence being major influencing factors in their decisions.
As the landscape of cryptocurrency continues to evolve, the interplay of trust, risk management, and regulatory clarity will be pivotal in bridging the gap between potential and participation in crypto-backed lending.
