Wealthy Bitcoin Holders Shift to Loans and Yield Products Instead of Selling
Summary
- Wealthy Bitcoin holders are securing cash through collateralized loans and interest income instead of selling, while investing part of their holdings in yield-generating products.
- Xapo Bank said it pays as much as 4.6% a year on dollar deposits in Bitcoin and separately targets returns of up to 4% a year through its Bitcoin credit fund.
- Rocca said Bitcoin could rise to $250,000 within the next two to three years if geopolitical and regulatory uncertainty eases, and that the move would depend on broader long-term institutional asset allocation.
Forecast Trend Report by Period
Wealthy Bitcoin holders are increasingly turning to collateralized loans and interest-bearing products rather than selling their crypto, CoinDesk reported on October 24.
Seamus Rocca, chief executive officer of Xapo Bank, told CoinDesk that clients are choosing to keep their Bitcoin while raising cash, allocating part of their holdings to yield products, or taking interest on dollar deposits in Bitcoin to accumulate more of the token.
“The key themes of this cycle are yield, accumulation and income generation,” Rocca said. Demand for accumulation-focused and yield-focused products is especially strong among funds and family offices. Five or six years ago, Bitcoin was seen mainly as a speculative trading asset. Now, more clients want financial services built around assets they already hold.
Xapo Bank’s client base broadly falls into two groups. Some early investors took profits after Bitcoin reached a record high. Investors who entered around 2018 and 2019, by contrast, prefer to keep holding and borrow against their Bitcoin when they need liquidity. Even among clients who have realized gains, many place funds in dollar deposit accounts and receive interest in Bitcoin, gradually increasing their holdings. Rocca said about 45% of Xapo Bank clients use that feature.
Xapo Bank currently pays a variable base rate of 4.1% a year on dollar deposits in Bitcoin. New customers receive a promotional rate of 4.6% for a limited time. Separately, its Bitcoin credit fund targets returns of as much as 4% a year through lending.
Large banks move slowly, Rocca said. Committee approval is needed to launch new products, and employees are often reluctant to take on work seen as risky. That creates an opening for firms like Xapo Bank, he added.
Rocca said Bitcoin’s next growth phase will depend on broader long-term institutional asset allocation. If geopolitical and regulatory uncertainty eases, Bitcoin could climb to $250,000 within the next two to three years, he said.
Minseung Kang
minriver@bloomingbit.ioBlockchain journalist | Writer of Trade Now & Altcoin Now, must-read content for investors.