December 4, 2022

Top Banking Institutions in the US Explore BTC-Backed Loans

  • Wall Street to banks is considering taking Bitcoin as collateral for cash loans.
  • The banks are working on possible groundwork to integrate crypto broker services soon.
  • Top banks in the US prefer cryptocurrency-related products such as futures to spot BTC.

Several top-tier United States banking institutions contemplate taking the leading digital coin, Bitcoin, as collateral for cash loans. Top Wall Street banking institutions, including Goldman Sachs, might not put their hands on spot crypto markets but might consider synthetic cryptocurrency products like futures.

Top US Banks Explore BTC for Loans

Top-tier banks in the United States, including Goldman Sachs, are considering the approach of taking the leading crypto by market value for institutional loans. According to the latest CoinDesk reports, the banks plan to complete cash loans while using BTC as collateral.

Nevertheless, most banks will not consider spot Bitcoin custody to avail the loans but appear interested in other cryptocurrency-related products like futures. Wall Street banking institutions are seeking to imitate 3-party repo arrangements. It is an approach to borrow funds through selling securities with plans to repurchase them via third-party agents.

Various sources suggest that the move is an opportunity to lay the ground for high integrated crypto prime broker services in the coming future. A source added that Goldman Sachs plans to obtain lending against collateral, plus the third-party repo approved.

Another outlet revealed that some banking institutions might utilize third parties for loan creation, while others might prefer using their balance sheet. The sources also stated that most top US banks debated BTC-backed loans. Moreover, some banks plan to evaluate the approach within the next six months.

Fidelity Digital Assets and Coinbase were among the possible custodians the Wall Street banks discussed with. Keep in mind that OCC approved savings associations and United States banks to custody crypto for their customers since 2020. Moreover, the FDIC chairman confirmed that regulators in the US were exploring customs for traditional banks to embrace BTC.

Bitcoin Aims to Retest $58,000

Bitcoin price appears weak as it hovers within the ascending parallel channel’s lower border around $56,400. Though the areas seem to serve as dependable support for Bitcoin, the dominant crypto assets will secure steady uptrends after reclaiming $58,045.

The governing chart formation indicates a bullish picture for BTC price, $87,910 being the optimistic aim. However, Bitcoin has to restart a recovery move as bears dominate the momentum. The crypto has to eye the resistance at 61.8% FIB retracement at $58,045 to escape a dip into the downtrends. This value area coincides with the 21-day SMA.

The next obstacle might emerge at 50-day Simple Moving Average at $60,836, then 78.6% FIB retracement at $63,062. Bitcoin price has its first defense line at the bottom border of the primary technical formation at $56,401. Failure to maintain this level may translate to a further fall to the 50% retracement at $54,520, matching the 100-day Simple Moving Average.