Bitcoin lenders are betting that stricter controls and clearer risk management can reconstruct confidence in a sector still haunted by the collapse of Celsius and Blockfi predecessors.
The main Bitcoin lenders of the previous cycle imploded after transforming user deposits into sub-collateralized loans. When Bitcoin (BTC) prices have dropped and liquidity was dried up, billions of customer funds have been frozen or left.
But these implosions do not prove that the loans supported by the crypto are condemned by design. Failures were largely the result of poor risk management rather than the model itself. According to Alice Liu, research manager on CoinMarketCap.
“Better transparency and a tierce guard also help reduce the risk of counterpart compared to opaque models like Celsius,” she told Cintelegraph.
But even if some long -term sheets now do not promise any rechypothecation and the lower loan / value (LTV) ratios, a sudden Bitcoin price swing can always put loan models under stress.
Bitcoin loans evolve from models from the Celsius era
The fall in lenders like Blockfi and Celsius revealed faults in the way the first cryptographic lenders managed the risk. Their models relied on rehylypothecation, poor management of liquidity and provoked bets wrapped in an opaque structure which gave customers little view of the management of their assets.
Rechyprotothecation is a practice borrowed from traditional finance, where brokers reuse customer guarantees for their own trades. It is a common and regulated strategy, but it is generally capped and disclosed to customers with strict reserve requirements.
Platforms like Celsius and Blockfi regularly reuse customer deposits, often without clear disclosure of capital tampons or regulatory limits, exposing users to risk of compensation and liquidity. The main difference was that Celsius aggressively marketed retail investors, while Blockfi had a stronger institutional imprint. Blockfi’s relationship with the Crypto Exchange FTX now struck and the Sister Alameda Research company has proven to be just as toxic.
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The loan market in the current cycle consists of mature investors and less “retail expense”, according to Liu. This means that the funds locked for bitcoin collateralized loans are longer -term holders, business treasury bills and institutional funds.
“Their motivations are now focusing on access to liquidity, tax optimization or diversification, not the return on agriculture,” said Liu. “This has reduced the pressure for products to compete in better terms; Instead, safety and risk assessment have been placed at the forefront of product assessment by users. ”
Rehyperothecation is still worried by many crypto users burned by Celsius. Platforms like Strike – managed by Bitcoin Maximalist Jack Mallers – promised never to rehyprotothecate the Bitcoin client, while those who have taken measures to explain how the model works and how it helps reduce loan costs thanks to greater transparency.
“Some players still warm up the BTC, which means that they reuse the guarantee of non-guaranteed loans elsewhere. It is essentially the same” Black Box “model that we saw in 2021-2022,” said Wojtek Pawlowski, CEO and co-conspirator.
“So, whether healthy or risky depends on the real structure and its transparency.”
Ready supported by Bitcoin featuring a return
Crypto-collateralized cryptocurrency loan companies were among the largest rising stars in the crypto a few years ago. Galaxy Research estimates that his combined loan book culminated at $ 34.8 billion in the first quarter of 2022.
But in the second quarter of this year, the Terra Stablecoin crash sparked a series of bankruptcies in the sector. The main lenders such as Blockfi, Celsius and Voyager Digital were taken in the disaster.
The size of the loans of loans reached the bottom of $ 6.4 billion, a drop of 82% of its glory days. Bitcoin’s loan model is gaining ground again, recovering at $ 13.51 billion in CEFI borrowing open at the end of the first quarter of 2025, representing growth of 9.24% quart-level, estimated Galaxy Research.
Today’s loan models have adopted improved risk controls, such as the drop in LTV ratios and clear advice on rehyperothecation. However, a central structural risk is that the whole model depends on a volatile asset like Bitcoin.
The commercial models of lenders like Celsius and Blockfi were already fragile, but their cracks began to expand in a crisis in its own right when the Bitcoin prices dropped.
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Modern lenders have discussed many of these problems using overlying and the application of stricter margins. But even conservative LTVs can quickly crash in net slowdown.
“The BTC remains volatile, where a price drop of 20% can always cause mass liquidations despite the platform (supervisor) (surveillance) LTV and (applying) margin calls in real time. If the platforms recount the guarantees of return strategies (rehypothecocation, defect of agriculture, etc.), risk yield, “said Liu.
Bitcoin loan models are not shown in bullets
Bitcoin’s volatility stabilized compared to its first years, but it remains subject to net daily oscillations.
At the beginning of 2025, Bitcoin frequently moved 5% in one day in the world of world trade tensions, even in March in March, according to Coingecko.
“(The loans supported by Bitcoin) are safer, but not the ball test,” said Cointelegraph Sam Mudie, co-founder and CEO of the Tokenized investment company. “A lower lever effect, public evidence and, in some cases, real banking licenses are real improvements.”
Even with LTV ratios and lower term leaves which now prohibit rehyperothecation, Mudie warned that cryptographic lenders still work with a collateral pool to a single asset whose value can drop from 5% of the day after.
Bitcoin loans unlock new cases of financial use. As Cointelegraph reported on June 15, the bitcoin collateralized loans allow users to exploit liquidity without selling their assets, helping them to avoid taxes on capital gains and even access the real estate market.
But Bitcoin purists remain suspicious. These use cases often involve traditional financial intermediaries and legal systems, introducing new risk layers.
“The use of Bitcoin to buy a house is an excellent title. However, (Bitcoiners) also know the real estate transactions by many inherited systems, not only smart contracts,” said Mudie.
Instead, Mudie plans more models of cryptocurrency loan: shared multisignature portfolios, public visibility in terms of overhain, hard limits on collateral reuse and automatic margin calls when prices drop. He added that platforms could protect users more by lending only 40% of the value of guarantees.
For the moment, the loans supported by Bitcoin undergo a prudent renewal caused by stricter orders and a stronger understanding of the risks that lowered its first wave. But until volatility is resolved at the root, even the safest models will have to remain humble.
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