Xapo CEO: Bitcoin holders prioritize borrowing and yield over selling

Seamus Rocca, CEO of Xapo Bank, stated that borrowing against bitcoin and earning income are becoming priorities for long-term investors. He told CoinDesk that customers are looking for yield and alpha. Wealthy bitcoin holders are increasingly treating their cryptocurrency as an asset to borrow against and generate income from. Xapo Bank customers are seeking cash without selling their bitcoin. This shift marks a change from five or six years ago, when bitcoin was primarily viewed as a trading and speculative asset. Today, more bitcoin holders want financial services built around their existing wealth.

Xapo customers are using bitcoin as collateral and accumulating BTC through interest on dollar savings. About 45% of Xapo customers use the feature of keeping proceeds in dollar savings accounts and receiving interest in BTC. Xapo advertises a variable base rate of 4.1% on dollar savings, paid in bitcoin. The company also offers a temporary 4.6% introductory rate for eligible new members. Additionally, Xapo's separate bitcoin credit fund targets annual returns of up to 4% through lending.

Experience from previous market cycles has divided Xapo clients between profit-takers and holders reluctant to sell. Some of the earliest adopters became more willing to take profits as bitcoin reached record prices. Investors who entered around 2018 and 2019 remain determined to hold and prefer borrowing against their coins when they need liquidity. Rocca said traditional banks' cautious approach leaves an opening for specialist providers. He noted that big banks are slow because new products require committee approvals. Xapo grew out of a bitcoin custody business known for its Swiss bunker storage.

Rocca expects bitcoin to reach $250,000 over the next two to three years. He argues that some participation through exchange-traded funds has involved arbitrage strategies.