Let’s talk about having access to funds Without Selling your BTC.
The problem every serious Bitcoin holder eventually face is the need for liquidity.
Selling means capital gains tax (often 30%+) and giving up future upside on an assets that has climbed in 78 of the last 100 months.
So what’s the alternative?
You can Borrow against it instead.
The logic behind that mirrors a mortgage. Banks lend 70-80% of a home’s value, never 100%, because the loan stays overcollateralized. Bitcoin lending works the same way because your pledged BTC is worth more than your loan. So you receive dollars or stablecoins against your BTC and get to keep your asset.
No sale, no tax event, no forfeited upside.
This isn’t just a fringe idea anymore. Crypto-collateralized lending hit $73.6 billion outstanding in Q3 2025 — a new cycle high — with on-chain lending up 42% in a single quarter.
Bitcoin dominates as collateral because lenders can price it, verify it, and liquidate it faster than any other asset. This is possible because of 24/7 markets, instant transfers, on-chain verification, zero courts or foreclosure timelines. That’s precisely why JPMorgan, Citi, and BNY Mellon now lend against it.
Here’s two numbers that decide everything:
•Your Borrow LTV: This is your loan size relative to collateral value at the start (for e.g., You borrowed $50K against $100K BTC = 50% LTV)
•Your Liquidation threshold: Thus is the LTV level where your BTC gets automatically sold, typically 80-85%
The gap between these two is your safety margin. At 50% LTV with an 80% threshold, Bitcoin needs to drop 37.5% before liquidation. At 70% LTV, just a 12.5% drop triggers it.
You also have to Watch out for capitalized interest too because some platforms add unpaid interest to your loan balance, quietly pushing your LTV upward even while BTC price holds steady.
Two ways to borrow against your bitcoin:
• Off-chain (CeFi) on platforms like Ledn or Unchained. With this option You get fixed rates, human margin calls with 24-72 hours to respond, and bespoke terms but funding takes hours to days, and you’re trusting the platform’s solvency.
Ledn’s track record stands out here with $10.2 billion originated since 2018, and early this year it closed a $188 million bond-like offering rated investment-grade by S&P, a first for Bitcoin lending, putting it roughly on par with sovereign debt from some countries .
• On-chain (DeFi): For Protocols like Aave or Morpho the rates run cheaper (4% vs. 8-12%), execution is instant, and everything is transparent on-chain. The tradeoff is that liquidation is fully automated with no human intervening, and rates float with market conditions.
The real risk to deal with is that Bitcoin has spent over 80% of its history in a 20%+ drawdown from its peak with corrections of 30-40% happening multiple times per bull cycle.
A loan that looks safe today can look reckless within months if you’re not actively managing your buffer.
Bitcoin lending is opening the door for pension funds and insurers to access Bitcoin-backed returns through structures they already understand.
I’m Curious which structure (CeFi or DeFi) actually fits your situation?
* Note that This is not financial advice but rather educational content. Don’t fail to DYOR!!! *
My only future grouse is the bole festival team will get Timaya to perform by 4am on Monday forgetting that people with emotional attachment to him, the 80’s and 90’s babies need to go to work 7:30am Monday.
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