New meta and market structures are being formed in real time as Capital is flooded with non-sovereign stores that are worthy of premier. Leading by high-profile moves from companies like Strategy, it is now reflected in a new wave of corporate acquisition vehicles, but Vitocoin is no longer betting on the future. In today’s capital markets, it is quickly becoming a fundamental layer.
However, this is not just about accumulating balance sheets. A paradigm shift is underway. Bitcoin has evolved from a valuable passive store to a productive financial infrastructure. The ETF opened the lock to a wider class of allocators. Liquidity is rapidly increasing. And perhaps most importantly, long-term holders are not satisfied with sitting still. They’re making Bitcoin work without selling it.
That’s where the lending market appears. The Bitcoin lending market has matured to the extent that it has influenced traditional ideas about the overall digital assets. Given the solid track record of impressive valuation, investors are proving that Bitcoin is a reserve asset you don’t want to sell. You’re better off against it.
In the face of currency devaluation and changing market dynamics, Bitcoin is an obvious choice as a store of value. Take a Mortgage: You can borrow against Bitcoin, buy a home, and pay a loan, and the value of the underlying Bitcoin continues to increase. This is happening more frequently as there is an increasing number of Bitcoin-rich individuals of entrepreneurs who have built up wealth outside the worldview paid from traditional financial salaries.
Approximately 30% of LEDN’s large loans are directed towards real estate, whether they purchase the property itself or undergo renovations. This is Bitcoin used as production capital. (Disclaimer: The author is co-founder and is the CSO of LEDN).
A significant portion of leveraged Bitcoin is essentially sent to entrepreneurs who run their business on the Bitcoin standard. They are paid in Bitcoin, they think in Bitcoin, but they need dollars for the cost. Or they use bitcoin-assisted loans to fund new ventures without selling stacks.
The companies also found their capital to be invested more wisely in Bitcoin than anywhere else. Increasingly, this activity comes from publicly traded companies that do not have the ability to utilize the public debt market that comes to us for liquidity. It should be emphasized that these are not crypto companies. These are the Treasury Ministry of Finance for traditional companies, banks and large corporations who recognize that leveraging their Bitcoin holdings is the best way to acquire working capital in contrast to accumulation.
The awakening of acquisition
To paint, these institutions can pledge $200 million in Bitcoin to unlock $100 million in liquidity through lending providers. After years of sitting on the sidelines, they are increasingly hoping for bitcoin exposure. But even more importantly, they understand how good Bitcoin is as collateral. Liquids are open 24/7, transparently priced and easy to manage with the program.
The abolition of SAB 121 has restricted how banks and businesses can hold crypto assets like Bitcoin on behalf of their clients, and by forcing them to be listed as liabilities on their balance sheets, how banks and businesses can hold crypto assets. This, and future policy changes, will accelerate the proportion of larger players entering the market, and without taking into account headaches, the rate will be compressed. Currently they are in low to medium double digits, but we hope to see a significant decline in the coming months and years.
In 2021, MicroStrategy redefines its corporate Bitcoin strategy. Everyone wants to be a strategy in 2025, but few people understand why it worked. The companies launch Bitcoin acquisition vehicles on the left and right, raising capital in particular to buy Bitcoin, and hope that the market is rewarding multiple expansions.
But it’s here. Many of these companies don’t necessarily believe in Bitcoin. They look at MicroStrategy’s playbook and believe that when you buy Bitcoin, they will also see multiples of those on your online assets. Others appear to be chasing Bitcoin headlines in the hopes of saving the decline in connection.
This inevitably changes over time. Ultimately, the market will not give the same bump in stock prices just to announce the purchase of Bitcoin. Companies are expected to hold Bitcoin with additional cash. Those who want a headline have to go further risk curves to get attention, which rarely ends well.
The difference between sustainable growth and speculation comes down to the foundations. The strategy withstanded their names, actually had one, maintained strong manipulation, and, importantly, they understood what they owned. A thriving company is a company that combines Bitcoin Holding with the trust that comes from solid business foundations, responsible leverage and transparency. Without these basics, you’re just chasing another company.
Beyond the four-year cycle
People always ask about the four-year cycle of Bitcoin – will institutional adoption change that? Bitcoin has a cycle that coincides with halving mining rewards, but coincides with the global liquidity cycle, the US Presidential cycle, and other macro factors. Correlation is not causal.
Bitcoin dances to the beat of global liquidity, especially as it becomes institutionalized. It is always susceptible to financial flows and macroliquidity cycles. This is a feature of all assets integrated into global financial markets.
Looking at the CEFI (intensive financial) lending market, it has recovered from the collapse of 2021-2022. However, the configuration is different. At the time, it was mostly stubcoins as people chased harvests in a zero rate environment. Now, in the Treasury, which offers true yields, much of its volume has moved to defi or disappeared completely.
Most of the remaining loans at CEFI are Bitcoin-supported loans. And here’s the key. Survivors were those focused on secured lending. Have companies like celsius, blockfi, and voyager given un-lending loans and re-guaranteed collateral? They were gone.
Building the future
We have finally reached a point where institutions understand the long-term nature of investing in Bitcoin. This means they are willing to offer longer terms, such as multi-year rate visibility rather than just one year. This makes the product better predictable for the borrower.
The entire market is mature. Combining CEFI and Defi volumes is approaching the 2021 high, but with a healthier composition. Previously it was much more composed of non-financed loans for speculation. Now it’s a secured loan to a productive user.
Most people who really understand Bitcoin will prefer to keep the spot as there is so much you can do with it. However, many investment vehicles do not allow direct Bitcoin holdings, so they settle for rappers on these acquisition vehicles. It’s not ideal, but it brings more capital to the ecosystem.
The future I see is that Bitcoin-backed loans will become as common as home equity loans, but available worldwide at competitive tax rates. Columbian entrepreneurs are the place to access the same financial products as New York entrepreneurs. Bitcoin works for you while you sleep, it’s appreciated as the currency is debed and provides liquidity to real-world needs. Bitcoin has proven to be increasingly essential to global financial infrastructure.
