Bitcoin-Backed Digital Credit Market Could Rival BTC’s Trillion-Dollar Cap

Dan Hillery, a digital asset allocator, suggests the market for Bitcoin-backed digital credit instruments has explosive potential and could one day rival Bitcoin’s own multi-trillion dollar market capitalization.

Hillery, of UTXO Management, highlighted the segment’s rapid growth in a new podcast interview. From a near-non-existent state two years ago, Bitcoin-backed digital credit is now a roughly $16 billion market. He described it as the fastest-growing part of Bitcoin’s capital structure and sees it as the foundational financialization layer built on top of the network itself.

His analysis focused on specific variable-rate preferred securities, such as STRC and SATA, explaining their pricing mechanics. Hillery detailed how mechanisms like buybacks are designed to anchor these instruments near their $100 par value. He also distinguished the risk profiles between digital credit and digital equity, positioning the former as a distinct asset class.

During the discussion, Hillery provided a look inside the structured credit fund he is building at UTXO, which includes senior and junior tranches. He argued that despite the market’s growth, major traditional fund classes are still largely unable to access this new form of digital credit, presenting a current opportunity for specialized allocators.