A Beginner's Guide to Borrowing Against Bitcoin and Crypto

When you believe your Bitcoin and other digital assets will appreciate over time, you might not want to sell them just to access immediate funds. This is where crypto-backed loans come in handy. By using your Bitcoin or other cryptocurrency holdings as collateral, you can borrow the funds you need while keeping your assets intact. Whether you need liquidity for trading, investments, or other financial needs, learning how to borrow against your crypto holdings is an essential skill for any digital asset owner.

Why Use Your Bitcoin as Collateral to Borrow

Instead of liquidating your holdings during market downturns or missing trading opportunities, borrowing against Bitcoin offers a practical alternative. You maintain your long-term investment position while gaining short-term liquidity. This approach is particularly useful if you’re confident in your asset’s future growth potential but need funds today.

The lending platform offers two main borrowing options: flexible-rate loans that adjust interest costs based on market conditions, and fixed-rate loans that lock in your costs upfront. Both options are overcollateralized, meaning your borrowed amount is backed by significantly more value in collateral, protecting both you and the lender from market volatility. The platform currently sets the initial collateral ratio requirement at 80%, ensuring you maintain healthy backing for your borrowed amount.

Starting Your First Crypto-Backed Loan Order

To borrow against your Bitcoin, you’ll need to access the lending interface and follow a straightforward process. Log in to your account, navigate to the Finance section, and select Crypto Loans from the menu. You’ll immediately see an overview of available lending products.

Next, browse the asset library to find Bitcoin or your preferred cryptocurrency. The system displays available loan durations alongside their corresponding interest rates—allowing you to compare options before committing. Select the loan structure that best fits your needs and click the borrow button to proceed.

For maximum flexibility, enter your desired borrowing amount manually, or use the “Max” feature to borrow up to your account’s limit based on your collateral value. Premium account holders can unlock additional borrowing capacity through VIP benefits, expanding your access to larger loan amounts.

Choosing Between Flexible and Fixed-Rate Borrowing

Flexible-rate loans offer adaptability—your interest rate fluctuates based on market supply and demand. This option works well if you believe rates will decrease or if you plan to repay quickly. Interest accrues hourly on the actual borrowed duration, so shorter terms result in lower total interest paid.

Fixed-rate loans lock in your interest rate for the entire loan term, providing payment predictability and budget certainty. With fixed-rate borrowing, interest is calculated upfront, so you know your exact cost before accepting the loan. These loans can be renewed up to five times, allowing you to extend your borrowing beyond the initial term if needed.

When setting up a fixed-rate loan, you can also enable “Auto-Repay” to have the system automatically use your account balance to repay the loan on the settlement date—helping you avoid overdue penalties. Alternatively, you can choose to automatically convert your fixed-rate loan to flexible-rate terms upon maturity, giving you options as market conditions change.

Managing and Monitoring Your Borrowed Positions

Once your loan activates, you can track all borrowing details from your dashboard. The overview displays your total debt, current collateral backing, and active loan orders. As market prices fluctuate, your collateral ratio (LTV) changes dynamically. Monitoring this ratio is crucial—if it climbs too close to the liquidation threshold, your assets face forced conversion to cover the loan.

The platform calculates your LTV in Cross Margin mode, meaning your collateral backs all your active loans collectively. This approach maximizes your borrowing efficiency by pooling collateral across multiple loans rather than isolating it per transaction.

You can adjust your collateral position at any time to reduce liquidation risk. Adding more collateral immediately improves your LTV, creating a safety buffer between your position and the liquidation threshold. Conversely, you can reduce collateral once your LTV improves sufficiently—the system only permits reductions that keep you above the minimum safety level.

Repaying Your Loan and Adjusting Collateral

Repayment flexibility is a key feature of crypto-backed borrowing. You can repay partially or in full at any time without penalty for early repayment on flexible-rate loans. However, fixed-rate loans charge interest upfront, so early repayment won’t refund unearned interest—though you still save on additional interest accrual beyond your repayment date.

When repaying, the platform first applies your payment to accumulated interest, then to the principal loan amount. This sequencing ensures that interest obligations are satisfied before reducing your debt balance.

For large repayments involving stablecoin conversions, the platform implements a per-transaction limit of $300,000 USD equivalent to manage market impact and maintain liquidity. If your repayment exceeds this threshold, you’ll need to process multiple transactions.

If you miss a repayment deadline, a penalty of three times the standard daily interest automatically accrues hourly during the grace period. Should the loan remain unpaid through the grace period’s conclusion, the platform liquidates your collateral to settle both the loan and accumulated penalties. An additional 2% liquidation fee applies to cover administrative costs. When collateral is converted to repay your loan, a conversion fee based on the higher rate between your collateral asset and borrowed asset applies.

Advanced Features: Renewal and Loan Management

Once you’ve repaid a loan with remaining balance, you can renew it—essentially extending your borrowing access without going through the full application process again. Loan renewal is available as long as you renew before the due date and your contract hasn’t reached its five-renewal maximum.

To renew, specify your updated collateral composition and review the newly calculated LTV and repayment schedule. The loan amount remains fixed during renewal—you cannot increase or decrease the borrowed principal during this process.

Set reminders for approaching repayment dates by customizing notifications on your dashboard. The system can alert you days before maturity, helping you plan repayment or renewal actions proactively.

Key Considerations Before Borrowing Against Your Crypto

The critical factor in maintaining a healthy crypto loan is vigilantly monitoring your LTV. As Bitcoin and other collateral prices fluctuate, your ratio shifts accordingly. A sudden market downturn could rapidly approach or exceed your liquidation threshold, resulting in automatic forced asset sales at potentially unfavorable prices.

Always maintain a comfortable buffer between your current LTV and the maximum threshold. Conservative borrowers might target LTVs around 50-60% to provide ample safety margin even during significant market corrections.

Keep sufficient assets in your Funding Account to cover repayment obligations, especially if Auto-Repay is enabled. Insufficient balance causes automatic repayment to fail, potentially triggering overdue penalties and liquidation.

Finally, compare flexible versus fixed-rate options based on your market outlook and repayment timeline. Short-term needs often favor flexible rates, while predictable long-term funding frequently benefits from fixed-rate certainty.

By understanding these mechanisms and maintaining disciplined collateral management, borrowing against your Bitcoin and crypto holdings becomes a powerful tool for accessing liquidity without abandoning your long-term investment thesis.