What's a Safe LTV Ratio for Bitcoin Loans?

A conservative LTV approach prioritizes protecting your Bitcoin above maximizing borrowing power: **Safety margin**: At 35% LTV with an 80% liquidation threshold, Bitcoin would need to drop ~56% before liquidation. Even the 2022 bear market (69K to 16K = 77% drop) wouldn't catch most conservative borrowers off guard with time to act. **Who this is for**: - Long-term holders who never want to risk losing BTC - Those who won't monitor daily and want to "set and forget" - Borrowers using loans for non-urgent needs - First-time Bitcoin loan users **Trade-off**: Less borrowing power. With 1 BTC at $100K, you'd access $25,000-$40,000 instead of $50,000-$70,000. **Our take**: For most people, conservative LTV is the right choice. The extra borrowing power isn't worth the stress and risk of aggressive positions.

Moderate LTV balances meaningful borrowing power with reasonable safety margins: **Safety margin**: At 45% LTV with 80% liquidation threshold, Bitcoin would need to drop ~44% for liquidation. Significant bear markets would require action, but you'd have time. **Who this is for**: - Active managers comfortable with monitoring - Those with reserves to add collateral if needed - Experienced borrowers who understand the risks - People with time-sensitive borrowing needs **Trade-off**: Requires attention. You can't ignore a 45% LTV loan—you need alerts and a plan for market drops. **Our take**: Moderate LTV works well for engaged borrowers using Margin Watch or similar monitoring. You need a plan for what to do if Bitcoin drops 30%+.

Aggressive LTV maximizes borrowing but dramatically increases liquidation risk: **Safety margin**: At 60% LTV with 75% liquidation threshold, Bitcoin only needs to drop 25% for liquidation. Bitcoin has dropped 25%+ in a single week multiple times. **2022 example**: Bitcoin fell from $48K (January) to $33K (January low)—a 31% drop in weeks. Anyone at 60% LTV would have been liquidated. **Who might consider this**: - Short-term loans (days/weeks, not months) - Traders actively hedging other positions - Those with immediate access to add collateral - ONLY people who fully understand and accept the risk **Our take**: Aggressive LTV is rarely appropriate for everyday borrowers. The "extra" borrowing power comes with massive liquidation risk that Bitcoin's volatility makes very real.

Bitcoin's historical volatility should inform your LTV decision: **Typical corrections (happen multiple times yearly)**: - 10-20% drops: Very common, happens within weeks - Safe at: 50% LTV or lower **Significant corrections (1-3 times per year)**: - 20-40% drops: Regular occurrence in Bitcoin's history - Safe at: 40% LTV or lower **Major bear markets (every 2-4 years)**: - 50-70% drops from peak: 2014, 2018, 2022 - Safe at: 30% LTV or lower **Catastrophic scenarios (rare but possible)**: - 80%+ drops: 2011 (94%), 2014 (86%), 2018 (84%) - Safe at: 20-25% LTV or lower A "safe" LTV depends on what scenarios you want to survive without taking action. We recommend positioning for significant corrections (40% LTV max) as your baseline.

Based on historical data and risk management principles, here's our LTV framework: **Start at 40% LTV maximum**. This gives you meaningful borrowing power while surviving most corrections without panic. **Set alerts at 50% and 60% LTV**. Know when you're approaching moderate and high-risk zones. **Have a 65% LTV action plan**. Decide NOW what you'll do if LTV hits 65%—add collateral, pay down, or accept risk. **Never exceed 70% LTV**. At this level, even minor volatility threatens your position. **Use our monitoring tools**. Margin Watch tracks your LTV 24/7, sends instant alerts, and shows 14-day risk forecasts so you're never surprised. The goal isn't to never face margin pressure—it's to always have time and options when you do.