Bitcoin has retreated from a peak of more than $126,000 last October and is hovering around $70,000, a level that suggests the prior run may be over for now. Earlier projections that bitcoin would reach $200,000 in 2025 now seem like a dream that proved false. Bitcoin began life as an extremely volatile asset, and many supporters continue to advocate holding.
Crypto-backed loans have proliferated, with Coinbase offering up to $5 million in USDC secured by bitcoin and up to $1 million secured by Ethereum. Other lenders, including Binance, Ledn and Strike, impose loan-to-value limits typically in the 50%–75% range to mitigate risk. Galaxy Research reported crypto-collateralized lending reached a record $73.6 billion. By the end of the third quarter, nearly $41 billion in loans were outstanding on DeFi platforms – the highest quarter-end level on record and up about 55% from the previous quarter.
This does not reflect traditional consumer borrowing, but rather crypto holders using digital assets as collateral as DeFi credit markets grow in size and activity. Enness Global says it’s simple to borrow against your crypto without selling it. With a 50% LTV, if you pledge $400,000 worth of bitcoin, you can borrow $200,000. When you repay the loan, you get your bitcoin back.
“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,” they said. “My retirement is completely in bitcoin,” she said. She invested in Strategy, a bitcoin treasury company.
She also borrowed against bitcoin, using Firefish, a noncustodial peer-to-peer lending platform, which puts your bitcoin into escrow. “I apply for a loan, lock in my bitcoin in an on-chain escrow, and receive funds.” Why don’t more people do what I’m doing? What’s the catch? I don’t see one.
“Well, except a prolonged dip in bitcoin.” President Donald Trump’s initial moves last year to turn the U.S. into a bitcoin “superpower” included cryptocurrency, private equity and real estate in 401(k) retirement plans. It was described by some as a “new dawn” for crypto, but in truth it was not nearly enough to bring anything resembling stability to the market. He signed an executive order to allow the Department of Labor and other federal agencies to create more exposure for “alternative assets,” including private equity, real estate and digital assets, for defined-contribution retirement plans. “There is no bitcoin ‘superpower’.” The executive order provides guidance; it is not legislation. It merely directed the Securities and Exchange Commission to consult with the Department of Labor to explore ways to allow 401(k) plan participants to have greater access to alternative assets. If you are a bitcoin investor and or have borrowed against the crypto, brace yourself for a bitcoin winter of discontent.
Matt Hougan, chief investment officer at Bitwise Asset Management, a global investment firm specializing in cryptocurrency and digital-asset investment products, wrote this week: “This is not a ‘bull market correction’ or ‘a dip.’ It is a full-bore, 2022-like, Leonardo-DiCaprio-in-The-Revenant-style crypto winter – set into motion by factors ranging from excess leverage to widespread profit-taking by OGs,” he said. So how long will this slide last? More than a year, Hougan estimates. Bitcoin peaked in December 2017 and bottomed in December 2018. It peaked again in October 2021 and bottomed in November 2022. By that measure, we’re in for a rough stretch. After all, bitcoin peaked in October 2025. Should we go away until next November? I don’t think so. The more time I’ve spent analyzing the current ‘winter’ the more I’ve realized it started back in January 2025. We just couldn’t see it because flows from ETFs and Digital Asset Treasuries obscured the picture. If you did borrow against bitcoin, buckle up.
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