Knowing your exact liquidation price is the most critical piece of information when managing a Bitcoin-backed loan. Our free Bitcoin liquidation calculator helps you determine precisely at what BTC price your collateral would be liquidated, giving you the insight needed to protect your holdings and avoid forced selling at the worst possible time.
How the Bitcoin Liquidation Calculator Works
Our calculator uses your specific loan parameters to determine your liquidation price:
1. **Loan Amount**: The total USD value you've borrowed against your Bitcoin
2. **Collateral Amount**: How much BTC you've deposited as collateral
3. **Liquidation LTV**: The loan-to-value ratio at which your platform liquidates (typically 70-90%)
4. **Current BTC Price**: Used to calculate your current LTV and safety margin
The formula is straightforward: Liquidation Price = (Loan Amount) / (BTC Collateral × Liquidation LTV)
For example, with a $50,000 loan, 1 BTC collateral, and 80% liquidation threshold, your liquidation price would be $62,500. If Bitcoin drops below this price, your collateral gets liquidated.
Why Liquidation Price Matters
Your liquidation price is your line in the sand—cross it, and you lose your Bitcoin. Understanding this number helps you:
**Plan for volatility**: Bitcoin can move 20-30% in days. Knowing your liquidation price helps you assess whether you can weather typical market swings.
**Set alerts**: With Margin Watch, you can set alerts at multiple levels above your liquidation price, giving you time to act before disaster strikes.
**Make informed decisions**: Should you add more collateral? Pay down the loan? Knowing exactly where you stand helps you make better choices.
**Sleep at night**: There's peace of mind in knowing your exact risk level rather than guessing.
Understanding Safety Margins
Your safety margin is the percentage Bitcoin would need to drop before you're liquidated. A healthy safety margin depends on your risk tolerance:
**Conservative (50%+ safety margin)**: You can survive even severe bear markets. This typically means starting with a 30-40% LTV.
**Moderate (30-50% safety margin)**: You can handle significant corrections but may need to act during major crashes. Starting LTV around 40-50%.
**Aggressive (under 30% safety margin)**: High risk of liquidation during normal market volatility. Starting LTV above 50%.
Our calculator shows your current safety margin and how it changes with Bitcoin price movements, helping you maintain your desired risk level.
Bear Market Scenarios
The calculator includes bear market simulations showing how your loan performs under stress:
**-20% scenario**: A typical correction that happens multiple times per year
**-40% scenario**: A significant pullback, common in Bitcoin's history
**-60% scenario**: A severe bear market, like 2022's decline from $69K to $16K
**-80% scenario**: Worst-case scenario testing
These scenarios help you understand whether your current position can survive different market conditions without liquidation. If a 40% drop would liquidate you, you may want to consider adding collateral or paying down your loan.
Taking Action Before Liquidation
If your liquidation price is uncomfortably close to the current Bitcoin price, you have options:
**Add more collateral**: Depositing additional Bitcoin lowers your LTV and pushes your liquidation price down.
**Pay down the loan**: Reducing your loan balance has the same effect—lower LTV, lower liquidation price.
**Set up monitoring**: Margin Watch tracks your LTV 24/7 and sends alerts when you're approaching danger zones, giving you time to react.
**Have a plan**: Know in advance what you'll do if Bitcoin drops 30%, 50%, or 70%. Having a plan removes emotion from crisis decisions.
The worst outcome is being liquidated because you weren't paying attention. Our calculator and monitoring tools ensure that never happens.
