Strike launched a Bitcoin-backed loan product that eliminates forced liquidations during market crashes. The company introduced the volatility-proof loans after customers experienced liquidations following Bitcoin's 54% decline from its peak after the May 2025 product launch. According to a Ledn report, 88% of surveyed crypto investors expressed interest in crypto-backed loans, yet only 14% have used them, with market volatility concerns cited as a primary barrier to adoption.
Strike Removes Price-Based Liquidations From Bitcoin Loans
Strike's new loan product removes margin calls and price-based liquidations entirely. The loans offer a maximum 45% loan-to-value ratio, meaning a customer who deposits $100,000 worth of Bitcoin as collateral can borrow up to $45,000. The loan term is limited to six months. While Bitcoin price declines will not trigger liquidation, borrowers must make repayments on time or risk losing their collateral.
Strike CEO Jack Mallers said the product was developed after customers provided feedback on the company's original Bitcoin loan offering, which launched in May 2025. During the following bear market, Bitcoin fell approximately 54% from its peak to its lowest point, which triggered liquidations for many borrowers whose collateral value declined below required thresholds. The new product is designed to eliminate that risk by ensuring that Bitcoin collateral is never sold simply because the market price falls.
Interest Rates Range From 10.7% to 14.2% APR
Strike's volatility-proof loans carry an annual percentage rate (APR) that is 2.95 percentage points higher than the company's standard Bitcoin loan products. Since Strike's regular loans currently charge between 7.75% and 11.25% APR, borrowers using the new product could pay interest rates ranging from approximately 10.7% to 14.2%. Mallers explained that the additional interest is used to purchase market hedges that protect both Strike and its customers from big price swings.
Crypto Lending Faces 14% Adoption Rate Despite High Interest
According to a recent report from crypto lending platform Ledn, 88% of surveyed crypto investors said they would consider using a crypto-backed loan, yet only 14% have actually done so. The report identified concerns over market volatility and confidence in lending platforms as the primary reasons for this gap between interest and adoption.
Mallers said that Bitcoin has experienced declines of at least 30% in 10 of the past 12 years, while suffering drawdowns of 50% or more on four occasions since 2014. These large corrections frequently triggered automatic liquidations across the crypto lending sector, which forced borrowers to sell their Bitcoin at depressed prices.
Analysts Highlight Structural Benefits for Bitcoin Markets
Bitcoin investor Fred Krueger argued that removing price-based liquidations could eliminate one of Bitcoin's biggest structural weaknesses during bear markets. Instead of temporary price declines forcing borrowers out of their positions, defaults would only occur if borrowers were unable to repay their loans. This could reduce forced selling during market downturns and help stabilize borrowing activity.
Rob Topping, executive chairman of Vibes Capital Management, described the offering as a useful option for borrowers looking for short-term liquidity without the risk of liquidation, although he acknowledged that the interest rate is relatively expensive.
FAQ
What is Strike's new Bitcoin loan product?
Strike launched a Bitcoin-backed loan product that removes margin calls and price-based liquidations. The loans offer a maximum 45% loan-to-value ratio and six-month terms, with interest rates ranging from approximately 10.7% to 14.2% APR. Borrowers must make repayments on time or risk losing their collateral.
Why did Strike develop volatility-proof Bitcoin loans?
Strike CEO Jack Mallers said the product was developed after customers provided feedback on the company's original Bitcoin loan offering, which launched in May 2025. During the following bear market, Bitcoin fell approximately 54% from its peak, triggering liquidations for many borrowers whose collateral value declined below required thresholds.
How many crypto investors have used crypto-backed loans?
According to a Ledn report, 88% of surveyed crypto investors said they would consider using a crypto-backed loan, yet only 14% have actually done so. The report identified concerns over market volatility and confidence in lending platforms as the primary reasons for this gap.
