Borrow or Sell? How Crypto Holders Access Liquidity

Borrow or Sell?

Every crypto holder eventually faces the same question when they need cash. It could be an unexpected bill, a large one-time purchase such as a house deposit, or a tax bill that calls for cash.

They have two options, and the obvious one is to sell some of their crypto. In exchange, they give up potential upside and may trigger a taxable event, depending on the jurisdiction. If they want to buy back later, they may have to pay more than they sold for.

Repurchasing also starts a new holding period, potentially delaying eligibility for preferential long-term capital gains tax treatment in jurisdictions that distinguish between short- and long-term holdings.

The alternative is borrowing cash against crypto assets, pledging them as collateral. Borrowing enables holders to remain exposed to the underlying crypto assets to the fullest extent. Borrowing works best for a particular kind of holder, i.e., those who plan to hold for years, are sitting on large unrealized gains, only need the cash for a while and have a clear way to repay.

For holders with this profile, selling their assets would mean an immediate large tax bill and forfeited potential gains in the future. A crypto-backed loan at a conservative LTV would avoid both of these events.

Market Context

The pool of holders who fit that profile has grown over the years. Nexo’s Future of Digital Wealth 2026 report found that two in three affluent investors hold crypto. Onchain data also points the same way, as Bitcoin’s long-term holder supply rose from 12.8 million BTC at the start of 2021 to 16.4 million BTC in October 2026. These holders are all potential borrowers the next time they need cash, which makes for a growing addressable market for crypto-backed credit.

Meanwhile, major crypto assets have become less volatile. Bitcoin’s annualized realized volatility fell from 81% in 2021 to 42% in 2025, or from 4.4x the Nasdaq-100’s to only 1.8x. Crypto remains more volatile than equities, which is part of its appeal to many crypto holders, but such compression in volatility enables lenders like Nexo to offer loans with lower rates and higher LTV ratios.

The crypto-backed lending market grew alongside both trends. After several major crypto lenders went bankrupt in 2022, total outstanding loans across CeFi lenders, DeFi lending apps and CDP stablecoins bottomed at $18.6 billion at the end of that year. By Q3 2025, they had reached $78.6 billion, more than four times the trough and above the 2021 peak of $73.8 billion.

When crypto prices fell in 2026, loan books shrank with the value of their collateral. Total loans dropped to $56 billion by Q2 2026, 29% below the peak, in quarterly steps of 9%, 5% and 17%. In 2022, by comparison, lending fell 56% in a single quarter as lenders collapsed. This time the market deleveraged gradually, which looks more like an ordinary credit cycle.

Crypto-backed lending has matured greatly since 2022. More long-term holders now have a reason to borrow. Their collateral is less volatile than it used to be, so it’s less likely to be liquidated, and the market just came through a downturn without lenders going under. A crypto holder who needs cash today has a much stronger case for borrowing than before.

Nexo’s Credit Line

Nexo had $1.72 billion in open loans in Q2 2026, a 7.5% share of the CeFi market and the third-largest book behind Tether and Maple. Both of those lend only to vetted institutions, which makes Nexo the largest CeFi lender that individual holders can borrow from directly.

Its core product, the Credit Line, is aimed at holders who need cash but don’t want to sell.

Clients borrow cash or stablecoins against BTC, ETH and 100+ other assets pooled into a single line, from $50 up to $2 million a day. The maximum LTV is 50% for BTC and ETH and 90% for USDT and USDC. Rates start at 0.9% a year and vary with the LTV held and the client’s Loyalty Tier, which is set by the share of NEXO Tokens in their portfolio.

• Flexible Repayment: There are no fixed dates or minimum installments. Interest accrues daily on the amount drawn, not the collateral posted, and the credit limit refreshes as the balance is repaid.
• Margin Handling: As LTV rises, clients are alerted to add collateral or repay. If it reaches Nexo's threshold, an automated engine sells only as much collateral as needed to pay down part of the line, spreading sales across various exchange and OTC venues, rather than closing the whole position.
• Additional Features: Nexo also has features like Automatic Collateral Transfer, which moves eligible assets from your Savings Wallet to your Credit Line Wallet to help protect your collateral from liquidation, and Collateral Exchange, which lets you swap assets within your Credit Line Wallet without repaying your credit line, helping you maintain a healthy LTV during market volatility.

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Nexo’s geographic restrictions and terms apply. Stated annual interest rate. Subject to eligibility and change. Borrowing against digital assets involves risk, including liquidation risk due to market volatility. Rates are subject to change and vary by eligibility, LTV, and applicable terms.

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Strategic Outlook

Crypto-backed credit began as a way to buy more crypto. While this use case still holds true, it now serves a more diverse range of holders: a larger, longer-term base that would rather not sell. For them, a credit line works less like a margin account and more like the securities-backed lines private banks extend against clients’ stock portfolios.

The crypto-backed lending market still rises and falls with crypto prices, but 2026 showed that it can absorb a downturn without the forced selling and lender failures of 2022.

Nexo is the largest CeFi lender that individual holders can borrow from directly, with a product that covers open-ended cash needs. As crypto-backed credit shifts from funding trades to meeting holders' cash needs, Nexo is one of the few large lenders built for that kind of borrower.