After bitcoin’s fall, pity those wildly enthusiastic investors who borrowed billions against crypto

1 hour ago 4

Quentin Fottrell

Sat, February 7, 2026 astatine 1:30 PM CST 6 min read

Galaxy Research reported successful November that crypto-collateralized lending reached a grounds $73.6 billion. (Photo taxable is simply a model.)

“Hodl” abstraction for this radical of investors.

The speculation that bitcoin would deed $200,000 successful 2025 present seems similar a dream. Mostly, due to the fact that it was. There are volatile assets — penny stocks, leveraged ETFs, emerging-market funds — and past determination is crypto. If you thought crypto was a hedge against economical troubles, geopolitical tensions, imaginable tech bubbles, inflation, precocious involvement rates, a lodging marketplace that has hardly fixed an inch and increasing worries astir the labour market, deliberation again. People hide astir past follies, either by prime and/or due to the fact that they’re distracted by the adjacent shiny thing.

As bitcoin prices caput south, investors whitethorn clasp their enactment and wonderment whether it was omniscient to spell wherever Nobel-winning economists feared to tread. Or they volition motion and say, “Time is connected my side.” After all, it’s not ever omniscient to put successful a mostly untested, decentralized plus without nerves of steel. And if you borrowed wealth against bitcoin? That’s a equine of a antithetic color. We ne'er learn: Roughly 600,000 borderline accounts were held by brokerage firms anterior to the 1929 stock-market crash. These loans helped to exacerbate the effects of the economical downturn.

And present bitcoin BTCUSD, the cryptocurrency that Nobel Prize-winning economist Paul Krugman has repeatedly decried arsenic a Ponzi strategy — beardown words for a trillion-dollar plus — is being battered (once again). Hovering astir $70,000 connected Saturday, the bloodletting apt isn’t implicit yet. It peaked astatine much than $126,000 past October, but those heady days are agelong gone. Bitcoin began beingness arsenic an alternate currency, 1 with immense volatility, and crypto aficionados are telling their followers to clasp (or “hodl”). Scores of radical person adjacent borrowed against it.

Related: Gold is backmost supra $5,000, but is it a high-risk bet?

Coinbase COIN offers crypto-backed loans, arsenic portion of a work launched past year, that let customers to get USDC stablecoin by utilizing crypto held connected Coinbase arsenic collateral. The company’s customers tin get up to $5 cardinal successful USDC by utilizing bitcoin arsenic collateral, and up to $1 cardinal utilizing Ethereum, the institution said. Binance, Ledn and Strike besides connection these services, but they each necessitate limits connected borrowers’ loan-to-value ratios (LTV) — often 50% to 75% — to assistance mitigate imaginable risks.