Bitcoin holders borrowing to finance leveraged trading retain their original investment and take on another source of exposure. Their coins continue to fluctuate, the financed position produces its own gains or losses, and the dollar loan remains payable regardless of either result.

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The attraction is access to trading funds without selling cryptocurrency upfront. There’s risk involved, too, tied to a volatile asset supporting debt while using the proceeds for a position that already involves leverage.

A new financing arrangement lets eligible Kalshi Prime brokerage customers borrow dollars from affiliate Kalshi Katalyst against bitcoin, ether or eligible stablecoins held with BitGo Bank & Trust, PYMNTS reported Wednesday (Oct. 21), citing Bloomberg. Proceeds fund perpetual futures margin and other eligible margin products. Customers retain ownership of their pledged cryptocurrency, subject to the lender’s security interest, according to a Thursday (Oct. 22) press release.

Perpetual futures provide exposure to asset prices without a conventional expiration date. The financing concerns futures trading, rather than establishing bitcoin-backed loans for ordinary sports or election wagers.

For borrowers, the collateral and the financed trade require separate accounting. A profitable futures position doesn’t necessarily offset a decline in pledged cryptocurrency. Conversely, rising collateral values don’t eliminate losses on the trade or the cost of borrowing.

The relationship between the positions also affects exposure. Borrowing against bitcoin to take additional exposure to rising crypto prices concentrates the borrower’s dependence on the same market.

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