Bitcoin-backed loans allow holders to access liquidity by pledging their Bitcoin without immediately selling part of their position. According to SALT Lending, these loans can help finance a property purchase, business expansion or investments in other markets while preserving exposure to Bitcoin. Loan proceeds generally do not constitute a taxable sale, unlike selling Bitcoin whose value has increased. However, a sharp decline in Bitcoin’s price can raise the loan-to-value ratio and lead to additional collateral requirements or liquidation. Borrowers must therefore compare borrowing costs and market risks with the benefits of keeping their holdings.
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Disclaimer: this content is for information purposes only and is not financial advice. Cryptocurrencies are highly volatile: you may lose all of your capital. Always do your own research. Legal notice
