Latest / Go Big with Gib Podcast / Ep 107. Borrowing Against Bitcoin on Coinbase -- How it Works

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Ep 107. Borrowing Against Bitcoin on Coinbase -- How it Works · Go Big with Gib Podcast

• 0:00
  SPEAKER_00: Welcome to the Go Big With Gibb podcast, where we talk to professionals, business owners, and entrepreneurs about their big wins.
• 0:10
  SPEAKER_00: A lot of people think the only way to use Bitcoin is to buy it and eventually sell it.
• 0:14
  SPEAKER_00: But today, I'm going to walk you through something more advanced and more powerful when used correctly.
• 0:20
  SPEAKER_00: Borrowing against your Bitcoin instead of selling it.
• 0:23
  SPEAKER_00: Specifically, how this works on Coinbase using a lending protocol called Morpho.
• 0:28
  SPEAKER_00: This is not hype, this is mechanics, risk management, and capital efficiency.
• 0:33
  SPEAKER_00: Here's the core concept.
• 0:34
  SPEAKER_00: Instead of selling your Bitcoin to get cash, use it as collateral to borrow against.
• 0:39
  SPEAKER_00: Why would someone want to do that?
• 0:41
  SPEAKER_00: Because selling Bitcoin can trigger capital gains, reduce long-term exposure, force bad timing decisions, whereas borrowing lets you access liquidity, keep your Bitcoin, stay positioned for future upside.
• 0:54
  SPEAKER_00: But, and this is critical, it only works if you understand the risk.
• 0:58
  SPEAKER_00: Step one, hosting Bitcoin as collateral.
• 1:01
  SPEAKER_00: On Coinbase, the process starts by selecting Bitcoin as collateral.
• 1:05
  SPEAKER_00: Behind the scenes, your Bitcoin is converted into a tokenized version called CBBTC.
• 1:10
  SPEAKER_00: That C B BTC is deposited into a morpho lending market.
• 1:14
  SPEAKER_00: Your Bitcoin is no longer tradable while it's collateralized, but it's still yours.
• 1:19
  SPEAKER_00: This collateral backs your loan.
• 1:21
  SPEAKER_00: Step two, borrowing USDC.
• 1:24
  SPEAKER_00: Once your Bitcoin is posted, you can choose how to borrow.
• 1:27
  SPEAKER_00: The loan is issued in USDC, a dollar pegged stablecoin.
• 1:31
  SPEAKER_00: That USDC shows up instantly in your Coinbase account.
• 1:35
  SPEAKER_00: There is no credit check, no fixed repayment schedule, no required monthly payment, but don't confuse flexibility with safety.
• 1:43
  SPEAKER_00: Risk still exists.
• 1:44
  SPEAKER_00: Step three, understanding LTV.
• 1:47
  SPEAKER_00: This is the most important concept loan to value or LTV.
• 1:51
  SPEAKER_00: LTV means your loan amount divided by the value of your Bitcoin collateral.
• 1:56
  SPEAKER_00: For example, if you have$40,000 of Bitcoin and a$20,000 loan, that's a 50% LTV.
• 2:03
  SPEAKER_00: Coin-based loans typically liquidate around 86% LTV.
• 2:07
  SPEAKER_00: If you hit that level, part of your Bitcoin is automatically sold.
• 2:11
  SPEAKER_00: The loan is repaid, you don't get a warning phone call.
• 2:14
  SPEAKER_00: So smart borrowers never go near that line.
• 2:17
  SPEAKER_00: Step four, risk management.
• 2:19
  SPEAKER_00: This is where people mess up.
• 2:20
  SPEAKER_00: Experienced borrowers usually start at 40 to 50% LTV.
• 2:25
  SPEAKER_00: Treat 65% as a danger zone and act before liquidation is possible.
• 2:30
  SPEAKER_00: Why?
• 2:31
  SPEAKER_00: Because Bitcoin is volatile.
• 2:32
  SPEAKER_00: If the price drops, collateral value drops.
• 2:35
  SPEAKER_00: LTV rises, and risk increases.
• 2:38
  SPEAKER_00: That strategy is not passive.
• 2:40
  SPEAKER_00: You must monitor it.
• 2:42
  SPEAKER_00: Step five, interest and time.
• 2:44
  SPEAKER_00: These loans accrue interest often around 6 to 7% annually.
• 2:49
  SPEAKER_00: That means your loan balance slowly increases.
• 2:51
  SPEAKER_00: Your LTV slowly creeps higher.
• 2:54
  SPEAKER_00: Time matters just as much as price.
• 2:56
  SPEAKER_00: This strategy works best when Bitcoin appreciates faster than the interest rate or when borrowed funds are used productively.
• 3:04
  SPEAKER_00: Can Bitcoin pay off the loan?
• 3:05
  SPEAKER_00: The answer is yes.
• 3:07
  SPEAKER_00: And this is the elegant version.
• 3:09
  SPEAKER_00: If Bitcoin appreciates enough, you can sell a portion of Bitcoin, pay off the loan completely, and still end up with more Bitcoin than you started with.
• 3:18
  SPEAKER_00: But this only works with conservative leverage.
• 3:20
  SPEAKER_00: Clear exit rules exist and emotional discipline.
• 3:23
  SPEAKER_00: This is not for everyone.
• 3:25
  SPEAKER_00: You should not borrow against Bitcoin if you panic during drawdowns.
• 3:29
  SPEAKER_00: You're tempted to maximize leverage.
• 3:31
  SPEAKER_00: You don't have a downside plan.
• 3:33
  SPEAKER_00: You think liquidation won't happen to you.
• 3:35
  SPEAKER_00: It happens fast and it's unforgiving.
• 3:37
  SPEAKER_00: So here's the final takeaway.
• 3:39
  SPEAKER_00: Borrowing against Bitcoin on Coinbase is a powerful tool, a way to access liquidity without selling, a strategy that rewards discipline.
• 3:47
  SPEAKER_00: But leverage is a blade used carefully.
• 3:50
  SPEAKER_00: It builds wealth, used emotionally, it destroys it.
• 3:53
  SPEAKER_00: If this helped you, share it with someone who still thinks Bitcoin is only about buying and selling.
• 3:59
  SPEAKER_00: This is how sophisticated investors think about capital, not just assets.
• 4:03
  SPEAKER_00: Until next time, stay disciplined and go big.