Bitcoin-Backed Loans Offer Brilliant Strategy: Ledn Co-founder on Shorting the Dollar
Imagine using a financial strategy that proved successful against a collapsing currency and applying it to the modern world of digital assets. Ledn co-founder, Mauricio di Bartolomeo, shares how his most successful investment before Bitcoin involved shorting the Bolivar and how Bitcoin-backed loans now offer a similar approach, effectively allowing holders to leverage their BTC while borrowing against the US dollar.
Mauricio di Bartolomeo’s Strategy: From Bolivar to Bitcoin
Before entering the world of digital assets, Mauricio di Bartolomeo honed his financial acumen in a challenging environment. He found significant success by shorting the Bolivar against the US dollar. This involved borrowing the rapidly devaluing Bolivar and using it to acquire and hold the relatively stronger US dollar.
As di Bartolomeo explained, “I was borrowing Bolivars and buying dollars with them, holding the hard dollars and having a borrow [position] on the weaker currency.” This strategy capitalized on the differential in currency strength, benefiting from the Bolivar’s depreciation.
Bitcoin-Backed Loans: The Modern Approach to Shorting the Dollar
With the advent of Bitcoin-backed loans, investors can now employ a comparable strategy using Bitcoin as the ‘hard’ asset. Instead of selling their Bitcoin to access liquidity, holders can borrow stablecoins or fiat currency using their BTC as collateral. This allows them to keep their exposure to Bitcoin’s potential appreciation while obtaining funds for other purposes.
According to di Bartolomeo, borrowing against Bitcoin means “you are in effect holding the hard money, which is Bitcoin, and taking a borrow [position] on dollars, which is a weaker currency.” This mirrors the dynamic of shorting the dollar relative to holding Bitcoin.
This approach creates a financial cycle seen in traditional markets, such as borrowing against:
- Real estate
- Stock portfolios
- Gold holdings
Bitcoin, in this context, functions similarly as a high-value asset against which one can borrow, avoiding the need to liquidate the asset itself.
The Growing Landscape of Crypto Lending
The strategy enabled by platforms like Ledn operates within the expanding Crypto lending market. This sector has experienced significant growth, driven by factors including Bitcoin’s price appreciation, increasing institutional participation, and the utility of stablecoins.
Data from Galaxy Research indicates the Crypto lending market reached a value of $30.2 billion by the fourth quarter of 2024. While still below the 2021 peak, this represents a substantial recovery and growth from recent lows.
The growth is partly attributed to decentralized finance (DeFi) applications, which facilitate onchain borrowing. However, centralized finance (CeFi) lenders also play a significant role. The Galaxy report highlighted that the top three CeFi lenders—Ledn, Tether, and Galaxy—account for a large portion of the market, with Ledn holding a notable $9.9 billion loan book at the end of 2024.
Summary: Leveraging Bitcoin as Hard Money
The insights from Mauricio di Bartolomeo highlight a strategic use case for Bitcoin-backed loans. By enabling users to borrow against their BTC rather than selling it, platforms like Ledn facilitate a strategy akin to his successful experience shorting the Bolivar. This approach positions Bitcoin as a ‘hard’ asset, allowing investors to effectively navigate currency dynamics and access liquidity while maintaining their long-term position in Bitcoin. The growing Crypto lending market underscores the increasing adoption and utility of such financial strategies within the digital asset space.
