Despite recent market headwinds, the crypto lending space has not just survived, it has remarkably matured now the recent bear market serving as the pressure test for the sector, forcing Bitcoin lenders to adopt stricter loss buffers as well as build institutional grade products and today's secured crypto loans are stronger than ever and also do increasingly resent.
Trapp by now new data shows that loan volume across all crypto 50% year over year to $67 billion in Q1 of this year and joining us live here at the New York Stock Exchange to discuss this growing demand for Bitcoin collateral as well as the outlook ahead for digital assets is Anthony Vassallo, the Director of Crypto at Silicon Valley Bank.
Anthony, great to have you here.
Thank you so much for joining me.
Good morning.
Good to see you.
Well, here we are about to head into the second half of 2026, and it goes without saying that there has been volatility across all asset classes this year.
But when we hone in on crypto, especially given the macro backdrop, what are we seeing when it comes to Bitcoin loans as well as borrowing?
Yes.
Volatility across the board except if AI is attached to it, of course, carrying the boat for everybody else.
With Bitcoin specifically, we did not even get a doubling of the prior all-time high.
New retail didn't show up, but the ETF products the most successful in history and even with the recent outflows, still over $100 billion in volume.
Across them as well, and the legacy holders still have very strong hands.
The institutions have showed up and the average wallet now that holds Bitcoin for over 7 years has done so.
1 out of 4 of them have done so.
So we're seeing a lot of people start to ask questions around what else can.
I do with this asset if I believe that I should never sell.
Well, expanding on that, given the price action we've been seeing in Bitcoin as well as in DAX this year, it goes without saying that a lot of people are concerned about what's happening when it comes to price action, but what is actually happening not just on the retail side but also institutions.
Yeah, so we're seeing institutions who are really interested in this asset at its all-time high of 125 and have been studying it for the last few months are now very prepared to deploy capital again, not too much demand from new retail, but you see.
A lot of those that have been in the asset for a long time accumulating down at this level, tax loss harvesting and even leveraging the asset to do things such as afford a down payment on a house or even buy more Bitcoin at what they perceive to be discounted prices.
Yes, and it's interesting you mention that because we're talking about a time where interest rates are higher for longer, at least for the time being.
We just got inflation figures for CPI for the month of May, and we're continuing to watch that macro landscape because there are so many implications moving forward for the cost of borrowing.
But when it comes to Bitcoin.
Collateral.
Tell us how it actually works and all the moving parts.
Yes, Bitcoin is different than the rest of crypto lending because of the way that the network works.
So most of the borrowing is done through centralized entities as opposed to DeFi, which includes a wrapped position and can introduce some counterparty risk.
So the typical terms are one can post their Bitcoin as collateral, borrow at a loan to value around 50%, depending at an interest rate somewhere between 7.5% and 15%.
There are different structures, term loans, lines of credit, but the too long don't read is if you don't want to exit the position and you want to continue to own as much of the network as possible, you post it as collateral where it cannot be re-hypothecated and then get dollars at about a 2 to 1 ratio.
And Anthony, for viewers out there who are watching right now, I'm sure they're continuing to monitor what's happening in terms of price action for Bitcoin, but when it comes to the Cycle, how is it different when it comes to lending compared to what we saw, say, when there was the collapse of other lenders such as Celsius in the past?
It's a great question.
On the cycle itself, this looks like pretty much as vanilla of a four year cycle as we've ever seen.
It doesn't feel good, but the timing aligns in terms of difference in lending right now, seeing real standards emerge.
So the lenders who are still around.
That preceded 2022, the majority of them have never experienced a loss.
There have been defaults on the loans as it goes down.
There have been liquidations, but there are no losses because they're lending so conservatively, and they're not doing a lot of the things that their predecessors were doing in their collapses of 2022.
We're actually finding and our research report is going to be coming out in a few weeks, we're actually finding that while they'll lend to 50, 65%.
That borrowers don't even want to borrow that much just in the event that a flash crash occurs or something like that.
The other major standard that's occurred is how these lenders borrow from capital providers, and Tether, Cantor, Galaxy are very active in the space.
So we forecast that as more areas of private credit and more banks want to lend to these lenders across the capital stack, the price of credit will decrease.
LTVs will go up, and I think folks will realize.
The risk is not principal to the asset.
It's more around the processes, procedures, and adherence to liquidation protocols.
And Anthony, finally, before I let you go, the last time you and I spoke, it was at the Digital Asset summit here in New York City, and previous to that, we did speak about the outlook for 2026.
And given the fact that here we are about to head into the second half of 2026, how is your outlook different now?
The outlook is we're clearly in a Bear market.
So we didn't, we didn't think that necessarily was not going to happen, but it's pretty clear now.
It seems like it really kicked off with the mass liquidations in October and then early February and now, but the building that's going on couldn't be any more exciting, and I think there's a lot of plumbing that's being built over the next 1 to 2 years that will become the standards for tomorrow.
So just thinking about the promises of crypto and where the utility comes from for users.
How do I learn about it?
How do I acquire it?
Where do I hold it?
Can I borrow against it?
How do I will it to my heirs?
I think the companies that are really focused on solving the real problems for usability and leveraging the power of the network will be the winners of tomorrow.
So in a nutshell, given the fact that you've been at SVV for close to a decade and been in this digital asset space, if you zoom out, give us your bird's eye perspective of what's unfolding and what we can expect coming down the pike.
Again, there's so much of a backstop, if you will, or support from those who have been in Bitcoin specifically for so long as well as the institutions, and I think it's a good thing that the VCs have become more disciplined.
So while it might be a little annoying for founders that they're only investing in a handful of different categories stablecoins, tokenization, decentralized AI to name a few.
Those that are doing more with less, I think, will be rewarded in the long run, and we still have a really Great opening to capital markets as well, so continuation of consolidation, IPOs, and I think the liquidity will follow.
Anthony, a lot of areas to keep our eyes on, so I appreciate your time.
Thank you so much for joining us today here at the New York Stock Exchange.
Thank you, Remy.
Thank you.
