“Take profits” and “hold forever” get treated like the only two options when crypto prices run up, but there’s a third path that gets talked about far less: borrowing against the position while keeping it and letting it keep generating returns.
Selling Isn’t Wrong, It’s Just One Option
Nobody goes broke taking profits, and depending on your goals, selling some or all of a position can absolutely be the right call. But selling also locks in taxes immediately and gives up any future upside on whatever you sell. Holding with no plan generates zero cash flow while you wait. Borrowing against the asset is a middle path: you keep the position, you don’t trigger a taxable sale, and you get access to liquidity you can use for other goals, whether that’s paying down a mortgage, funding other investments, or covering lifestyle expenses.
How Crypto-Backed Lending Works
Terms in this space are still maturing. Interest rates on loans backed by digital assets like XRP currently run in the range of 13% to 15%, with loan-to-value ratios typically between 40% and 60%. That’s not cheap money, it’s closer to what real estate borrowing looked like decades ago before rates settled into a more competitive range. The terms have been improving, but this isn’t a free source of leverage.
The Structure Matters More Than the Headline Rate
Not all crypto-backed lending works the same way. Some platforms use smart contracts that liquidate your collateral automatically the moment a price move pushes your position underwater, with no negotiation and no time to respond. Other lenders work through tri-party agreements with actual counterparties, where a margin call becomes a conversation rather than an automatic sale, giving you time to cure the position, add collateral, or otherwise respond before anything gets liquidated. During a sharp liquidation event on October 10, one lender reported roughly $35 million in outstanding loans against digital assets with zero forced liquidations, because the structure allowed clients time to meet capital calls rather than triggering an automatic sale.
That difference in structure is worth understanding before you borrow against any asset, not just crypto. A lower advertised rate paired with an automatic liquidation trigger can end up costing you the entire position in a fast-moving market, while a higher rate with a human counterparty willing to work with you through volatility might be the safer trade even though it looks less attractive on paper.
Match the Strategy to the Goal
There’s no universal right answer between selling, holding, or borrowing against a position. It depends on what you’re actually trying to accomplish: paying off a house, funding other investments, building a legacy, or simply living well without giving up long-term upside. Whichever direction fits your situation, it’s worth working through the numbers and the risks with a financial advisor or certified financial planner who understands both the tax consequences of selling and the mechanics of the lending structure you’re considering, rather than defaulting to whichever option is loudest online.
Educational only, not tax, legal, or investment advice. Check primary sources and speak with a qualified professional before making financial decisions.
