Borrow USD against your Bitcoin. Keep your upside. Understand the risks.
You deposit Bitcoin as collateral and borrow USD against it. The Loan-to-Value (LTV) ratio determines how much you can borrow relative to your collateral's value.
Deposit 0.2 BTC at $100,000 per coin. Borrow $10,000 - a 50% LTV.
Your loan balance grows each day at 5% APR. The blue bucket slowly fills up, increasing your LTV - even if BTC price stays flat.
When Bitcoin's price falls, your collateral shrinks. The orange bucket drains - pushing your LTV dangerously higher.
If your LTV is getting too high after a price drop, you can pay back some of your loan to bring the blue bucket down. This directly lowers your LTV.
Instead of repaying USD, you can deposit more Bitcoin to increase the orange bucket. More collateral = lower LTV, even at the same price.
When Bitcoin's price increases, your collateral becomes more valuable. The orange bucket grows - your LTV drops and you're safer.
When your collateral grows in value, you have room to take out additional USD. This increases your loan (blue bucket goes up) and raises your LTV - but you get more cash.
If your LTV hits 86%, automatic liquidation kicks in. Your Bitcoin is sold to repay the lender. The loan is considered repaid - but you lose your BTC.
If Bitcoin appreciates faster than the 5% annual interest, your LTV naturally decreases - you may never need to actively repay.
Disclaimer: This is a fictional educational scenario for illustrative purposes only. Actual Bitcoin-backed loan providers offer varying terms, interest rates, LTV ratios, and liquidation thresholds. Always research and understand the specific terms of any financial product before using it. This is not financial advice.