Cantor Fitzgerald just dropped $2 billion into a new Bitcoin lending business. That move alone shoved the whole crypto lending sector out of its grave.
After the 2022 collapse wiped out lenders like Celsius, BlockFi, and Genesis, most people thought the space was dead. Not anymore. Big firms are back. Big money is back. And they’re all acting like they didn’t watch the last explosion in real-time.
This month, Cantor kicked off its global crypto financing operation. At the same time, Blockstream Corp. raised billions for its own lending fund. Xapo Bank now offers Bitcoin-backed loans up to $1 million. It’s not just startups anymore—actual institutions want in. “The new lenders will be much more institutional in nature,” said David Mercer, CEO of LMAX Group. “More banks will enter the space and provide credit mechanisms to some of the largest institutions you can imagine to trade these assets.”
Big firms throw billions at Bitcoin lending again
Back in 2021, crypto lending went wild. Native lenders like Genesis, Celsius, and BlockFi dished out unsecured loans to hedge funds and exchanges. Then crypto prices fell. Those loans blew up. Everyone went bankrupt. Now, lenders are returning, but with tighter rules—less leverage, more collateral, fewer cowboys.
“There haven’t been a lot of people willing to give leverage, all the undercollateralized lending went away,” said Rob Hadick, general partner at Dragonfly. According to him, almost nobody knows how to manage risk in this space. That’s been a major problem. Exchanges, brokers, and market makers had to scramble after 2022. The industry-native lenders were gone. The banks weren’t stepping in either, thanks to all the heat from the Biden administration.
Now there’s a shift. “With the new administration, I think that regulators will have a more reasonable regime and approach, and perhaps the banks will get more involved,” said Bobby Zagotta, CEO of Bitstamp USA. That change in tone is opening doors.
One thing hasn’t changed: crypto firms still need short-term cash. Bitcoin-backed loans are the go-to move for that. But banks still don’t want anything to do with it. They don’t like the volatility that comes with using Bitcoin as collateral. “The majority of the demand for borrowing today in digital assets is around cash,” said Adam Sporn, head of prime brokerage at BitGo. “It has been a constraint because you don’t have any large banks that are lending into the space.”
Trump’s win sparks institutional interest in crypto lending
The return of Donald Trump brought real changes. He supports crypto. That means more lenders are suddenly feeling brave. “We have seen excitement from more traditional lenders as they have gotten more comfort from the current administration,” said Hadick from Dragonfly. The shift in policy is letting institutions explore Bitcoin lending with fewer legal headaches.
Mercer from LMAX thinks this could lead to Bitcoin-backed loans supported by bigger balance sheets and better risk management. That’s the bet now: bigger lenders, more conservative terms, and less risk of collapse. Loans today come with lower loan-to-value ratios. Borrowers have to bring more collateral upfront. “There is still not a lot of interest in undercollateralized loans yet,” Hadick said. He believes the return of that kind of lending would help improve market liquidity.
Still, nobody’s forgetting how bad it got. “I remain skeptical crypto natives can spontaneously invent hundreds of years of credit lessons,” said Austin Campbell, CEO of WSPN USA and professor at NYU Stern. “I think it requires expertise from outside the industry.” In short, crypto folks blew it before. Now the suits want to do it their way.
Bitcoin price surge adds fuel to lending revival
The spike in Bitcoin prices is throwing gasoline on this whole comeback. Bitcoin funding rates—what traders pay to open long positions in perpetual futures—jumped more than 10x from June to November, according to CoinGlass. That means traders want leverage. Badly. And when Bitcoin passed $100,000 this week, it made lenders even hungrier to jump back in.
Lending volume through the first nine months of 2024 nearly tripled compared to 2023. But it’s still way below 2021 levels. And now, a lot more of it happens on DeFi platforms, not centralized ones. Decentralized apps handled nearly $31 billion so far this year. Centralized providers only loaned out $5.8 billion, according to Galaxy Research.
Back in 2021, firms like BlockFi and Genesis exploded because they gave out dumb loans in an environment with zero interest rates. With the banks out of the picture, those lenders became the go-to for anyone looking for capital. Now, they’re gone. BlockFi and Genesis went bankrupt. Celsius blew up with $1 billion in debt and is now paying $3 billion to its creditors. This week, Celsius founder Alex Mashinsky pleaded guilty to two counts of fraud. One more reminder of how bad it really got.
Through Q3 this year, total lending volume—DeFi and centralized combined—stood at $36.8 billion. That’s still just half of what it was during the same period in 2021. But it’s nearly triple 2023’s numbers, thanks to new crypto ETFs and Trump’s pro-crypto stance.
And the comeback is far from smooth. Credit risk still hangs over everything. Crypto remains volatile. And while these new lenders might wear suits and talk about “institutional maturity,” no one forgot what happened the last time everyone chased yield without thinking twice.
The industry is trying to fix the liquidity gap. But without major banks jumping in full force, things move slower. Lending remains smaller, and more cautious. Even the rise in decentralized lending hasn’t replaced what was lost. But with Cantor dropping billions and more firms lining up, the market isn’t dead anymore. Just a little bruised.
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