The case for growth relies on a simple dynamic: as bitcoin ownership expands and prices rise, holders increasingly want to borrow against collateral valued for tax efficiency, working capital, or lifestyle reasons, while lenders gain comfort by underwriting overcollateralized loans secured by a highly liquid asset.
The Bitcoin lending industry has been reshaped by the failures of Celsius, BlockFi, and Genesis during the 2022-2023 crypto lending crisis. Although each firm had different business models, they shared common vulnerabilities: maturity mismatch, excessive leverage, concentrated counterparty exposure, and rehypothecation of client assets.
Their collapses highlighted the importance of prudent underwriting, transparent risk management, and fully collateralized lending principles that have become the foundation of the next generation of BTC-backed lenders, according to the SVB report.
According to SVB, landmark transactions, including Ledn’s $188 million asset-backed security, the first Bitcoin-backed transaction to receive an investment grade rating from a nationally recognized statistical rating organization, highlight the growing confidence in BTC-backed credit structures.
While bitcoin-backed loan rates typically range between 7.5% and 16%, an annual percentage rate (APR), well above comparable traditional financing, SVB expects increased participation from banks and private credit funds to narrow the spreads over time. Early signs are already emerging, including Strike’s recently announced 7.5% rate on term loans over $5 million, backed by a $2.1 billion credit facility from Tether.
