Bitcoin Loans Without Liquidation Risk
Zero liquidation risk. No forced sales. No market volatility penalties.
Liquidation is one of the greatest risks in Bitcoin-backed lending. When prices drop, traditional lenders can force-sell your collateral, locking in losses at the worst possible time. BTC-to-BTC lending eliminates this risk entirely.
In Short
- No liquidation mechanism: BTC-to-BTC loans can't be liquidated because both sides are the same asset.
- No forced sales: Market volatility never triggers automatic collateral sales.
- Stable loan terms: Your repayment amount is fixed in Bitcoin, regardless of USD price movements.
- Sleep better: No monitoring liquidation thresholds or worrying about price crashes.
How Traditional Loans Get Liquidated
Traditional Bitcoin-backed loans create liquidation risk through asset mismatch:
1. You Stake Bitcoin, Receive Fiat
You stake 10 BTC worth $1M and receive $500k in USD (50% LTV). The loan is denominated in USD, but your collateral is Bitcoin.
2. Bitcoin Price Drops
Bitcoin falls 30% to $70k. Your 10 BTC collateral is now worth $700k, but you still owe $500k USD. Your LTV ratio has worsened from 50% to 71%.
3. Liquidation Threshold Breached
Most lenders liquidate at 80-85% LTV. If Bitcoin drops further to $62.5k, your LTV hits 80%. The lender automatically sells your Bitcoin to cover the loan.
4. Forced Sale at Worst Time
Your Bitcoin is sold at the bottom of a crash. You lose not just the loan amount, but also liquidation fees, slippage, and the opportunity to recover when prices rise again.
The Real Cost: Liquidation doesn't just mean losing your collateral. You lose it at the worst possible price, often with additional fees, and you miss any subsequent recovery. This compounds losses dramatically.
Why BTC-to-BTC Loans Can't Be Liquidated
Bitcoin-to-Bitcoin lending removes liquidation risk because the loan and collateral are the same asset:
The Math That Prevents Liquidation
With BTC-to-BTC loans, liquidation is mathematically impossible:
- You stake: 10 BTC
- You borrow: 9.5 BTC (95% LTV, 5% fee)
- You repay: 10 BTC
If Bitcoin's USD price doubles, halves, or crashes 90%, the LTV ratio stays exactly the same because both sides are Bitcoin. There's no asset mismatch to create liquidation risk.
Traditional Fiat Loan
BTC-to-BTC Loan
Real-World Scenario: Price Crash
Traditional Loan: Stake 10 BTC ($1M), borrow $500k USD. Bitcoin crashes 50% to $50k. Your collateral is now worth $500k, matching your loan amount. LTV is 100%—well above the 80% liquidation threshold. Forced sale occurs.
BTC-to-BTC Loan: Stake 10 BTC, borrow 9.5 BTC. Bitcoin crashes 50%. Your collateral is still 10 BTC, your loan is still 9.5 BTC. LTV remains 95%. No liquidation mechanism exists. You keep your Bitcoin.
What Zero Liquidation Risk Means for You
No Monitoring Required
You don't need to watch Bitcoin prices daily, check liquidation thresholds, or worry about margin calls. Your loan terms are stable regardless of market conditions.
Survive Any Market
Bear markets, flash crashes, or extended downturns don't threaten your collateral. BTC-to-BTC loans are built to weather any Bitcoin price volatility.
Peace of Mind
Sleep soundly knowing your Bitcoin can't be forcibly sold. This eliminates one of the greatest psychological stresses in traditional Bitcoin lending.
Capital Efficiency
With 95% LTV and no liquidation risk, you can confidently leverage more of your Bitcoin's value than traditional lenders allow, without the associated risks.
Liquidation Risk by Loan Type
| Loan Type | Liquidation Risk | Liquidation Threshold | What Triggers It |
|---|---|---|---|
| Traditional Fiat Loans | High - Common | 80-85% LTV | Bitcoin price drops relative to USD loan amount |
| High LTV Fiat Loans | Very High - Frequent | 90-95% LTV | Minor price movements can trigger liquidation |
| BTC-to-BTC Loans (LMC) | None - Impossible | N/A | No mechanism exists - same asset on both sides |
Eliminate liquidation risk from your Bitcoin lending strategy. See how BTC-to-BTC loans compare in your situation.
Ready to Eliminate Liquidation Risk?
BTC-to-BTC lending removes the threat of forced sales entirely. Use our calculator to model your scenario, or request an introduction to learn more.
Important: Loan My Coins acts solely as an introducer. All loans and agreements are entered into directly with an independent loan provider. We do not provide financial advice. Always do your own research.