Bitcoin Borrowing Gap Widens as Holders Prefer Leverage to Liquidation

A growing number of Bitcoin holders are opting to borrow against their digital assets rather than sell them, according to new research from Ledn and Protocol Theory.

The study found that over 88% of crypto holders in the US and Australia would consider borrowing against their digital assets, but only 14% currently do. This 'collateral gap' is a significant discrepancy between those who are willing to borrow and those who actually do it.

Ledn's core product allows holders to pledge Bitcoin as collateral and borrow dollars against it without selling the coins. The company has crossed more than $10 billion in loan originations since 2018 and is SOC 2 Type 2 certified, publishes proof-of-reserves, and an open-book report.

The main concerns for those who don't borrow are trust and understanding. They cite managing Bitcoin's price volatility, liquidation risk, and regulatory uncertainty around crypto-backed loans as their top worries. Mauricio Di Bartolomeo, co-founder of Ledn, says that the demand side of the equation is solved but the trust infrastructure still needs to catch up.