Coinbase Is Letting You Borrow Against Your Bitcoin — Here’s How It Works and Why People Are Talking About It

Picture this. You’ve been holding Bitcoin for months, maybe years. Prices have been moving in your favor, and you don’t want to sell because you believe there’s more upside ahead. But something comes up. You need cash.

Until now, that usually meant two bad options. Either you sell and lose your position (and possibly trigger taxes), or you take out a high-interest personal loan from a bank.

Coinbase just gave us a third option. You can now borrow money using your Bitcoin as collateral. And you don’t have to sell a single satoshi to do it.

This is made possible by Morpho, an open-source lending platform that runs on Coinbase’s Base blockchain. If you’ve been wondering how to turn your crypto into spendable cash without losing your investment, this is worth understanding.

How the Loan Process Works

This isn’t just “staking with benefits” or some complex DeFi hack. Coinbase has made the process simple enough that anyone can do it from their phone.

1. Log into the Coinbase mobile app.
2. Go to the Cash tab and select Borrow.
3. Enter the amount you want to borrow in USDC (the stablecoin).
4. Your Bitcoin is automatically converted to Coinbase Wrapped BTC (cbBTC) at a 1:1 ratio.
5. That cbBTC is locked in a Morpho smart contract as your loan collateral.
6. You receive the USDC in your account almost instantly.
7. Use the USDC like cash — spend it, transfer it, or even earn yield on it within Coinbase.
8. Repay whenever you want, with no fixed schedule, as long as you maintain enough collateral to avoid liquidation.

Loan Amounts, Interest Rates, and Limits

When Coinbase first rolled this out in early 2025, the maximum loan amount was $100,000. That cap has since been raised to $1 million for eligible customers in the United States (except New York).

Interest rates are variable. They move with market demand on the Morpho protocol and can change block by block. Some days they’ll be lower, other days higher. There’s no fixed APR locked in at the time of borrowing.

Repayments are flexible. You can pay everything back in one go, or in small amounts over time. Just remember that interest accrues continuously until the balance is fully paid.

The Liquidation Risk

Your collateral is Bitcoin, and Bitcoin’s price can swing fast. If the value of your BTC drops enough that your loan balance exceeds 86% of the collateral value, Coinbase will trigger a liquidation.

Liquidation means Morpho will sell enough of your collateral to cover the loan and add a 4.38% penalty. Any leftover Bitcoin is returned to you.

If you’re borrowing this way, you need to watch your loan health closely — especially during volatile markets.

Why People Are Excited

Crypto investors have been asking for this kind of feature for years. The idea is simple: you keep your Bitcoin, you keep your exposure to future gains, but you can still use its value today.

Here’s why it’s catching attention:

• No selling means no capital gains tax events in most jurisdictions.
• Instant access to liquidity without a credit check.
• Fully transparent since Morpho is open-source.
• Integrated directly into Coinbase’s easy-to-use platform.

For some, this could be the bridge to pay off higher-interest debt, fund a business, or handle an emergency without cashing out at a bad time.

The Downsides You Can’t Ignore

This isn’t free money, and it’s not without risk.

• Interest rates can rise quickly, especially in volatile markets.
• Crypto prices can crash, leading to liquidation.
• While Coinbase is regulated, Morpho is still DeFi, which comes with smart contract risks.
• This should not be used to fund risky trades or speculative bets.

The smart move is to borrow less than the maximum you can and have a plan to repay even if Bitcoin’s price dips.

How to Sign Up

1. You need a verified Coinbase account.
2. Have enough Bitcoin in your account to use as collateral.
3. Access the loan feature from the mobile app under the Cash section.
4. Follow the on-screen instructions and confirm the transaction.

No credit checks. No lengthy approval process. If you have the BTC, you can borrow within minutes.

Final Thoughts

This new Coinbase loan service is a big step toward making crypto a truly functional part of personal finance. It blends the transparency of DeFi with the user-friendliness of a major exchange.

Used wisely, it’s a powerful tool. Used recklessly, it can put you at serious risk.

If this caught your attention, bookmark Inbox27.com so you don’t miss the next major crypto and investing update. Share this article with your friends and on your social media — this is the kind of information that can help people make better money moves.

External Resources and References

1. Coinbase Blog — USDC Loans with Bitcoin Collateral
2. Investopedia — Coinbase Bitcoin Loan Coverage
3. Crypto News — Coinbase and Morpho Partnership
4. Brave New Coin — Loan Mechanics and Risks
5. Outposts — Morpho Loan Volume Growth