The 2025 Complete Guide to Bitcoin Borrowing
Learn how to unlock liquidity from your Bitcoin in 2025, without selling, by navigating today’s best loan rates, collateral requirements, and smart strategies for borrowing safely.
Unlock Liquidity Without Selling Bitcoin
Bitcoin borrowing has emerged as a powerful strategy for holders to access liquidity while never selling. Below is a comprehensive breakdown of how it works, why it matters, and how to get the most out of your BTC.
What Is Bitcoin-Backed Borrowing?
Bitcoin-backed borrowing lets users pledge their BTC as collateral and take out loans in fiat, stablecoins, or other assets. This strategy allows you to unlock liquidity while still holding your Bitcoin and benefiting from potential upside. With Bitcoin breaking $120,000 and record ETF interest, borrowing it has become a great subject of interest. Notably, Coinbase & Strike are now offering Bitcoin lending products, although still centralized.
How It Works
Step-by-step process:
Pledge BTC as collateral — Deposit a portion of your Bitcoin, to borrow usually up to 50 to 70% of its value.
Receive loan Choose a loan type such as USD or USDC and receive it instantly.
Maintain loan — Monitor your loan-to-value (LTV) ratio. If BTC price drops, you may need to add collateral to avoid liquidation.
Repay & reclaim BTC — Once the loan and interest are paid off, you get your BTC back.
Why Borrowing off Bitcoin Makes Sense
No capital gains tax: Since you’re not selling BTC, borrowing typically does not trigger a taxable event.
Hold long-term upside: You keep full price exposure to Bitcoin’s appreciation.
Flexible terms: Many platforms offer interest-only payments, no fixed schedules, and no credit checks.
Risks and Mitigations
Liquidation risk: If Bitcoin’s price drops and your LTV goes above a threshold, your position can be liquidated.
Platform risk: Custodial platforms may be exposed to insolvency or regulatory risks. Use platforms with proof-of-reserves and transparent policies.
Interest rates: APRs can vary widely. While some platforms offer 5 to 10%, others may charge 12% or more depending on the product.
Current Market Snapshot
Coinbase + Morpho: Offers USDC loans against BTC with high LTVs and flexible terms.
Ledn: Offers up to 70% LTV loans at around 12.4% APR, with global accessibility.
Strike: Provides 12-month loans at around 9.5% APR with flexible repayment options.
SALT: Offers loans with up to 70% LTV and terms up to 60 months.
AAVE: With over $7B in Bitcoin supplied & $300M in borrowed BTC, AAVE leads the on-chain lending market.
Choosing the Right Platform
LTV limits: Higher LTV gives more capital upfront but raises liquidation risk.
APR and fees: Lower interest rates can significantly reduce borrowing costs.
Repayment structure: Choose between monthly payments or lump sum at maturity.
Security and reputation: Stick to platforms with strong compliance, insurance, and transparency.
Final Thoughts
Borrowing against Bitcoin is a strategic way to access liquidity while still having exposure to the best performing asset of the past 17 years. With more platforms offering flexible, non-custodial loan structures, it’s easier than ever to put your BTC to work. However, risk management is key.
Some solid providers are offering Bitcoin-backed lending, but most suffer from centralization risks, or unattractive rates. At Sats Terminal, we believe that the best solution is an on-chain, secure, permissionless Bitcoin lending platform.
Unlock liquidity. Hold your Bitcoin.
To read about the latest in the Bitcoin Layer 2 space, see our overview here.
For more on our proprietary Runes swapping algorithm, check out our overview of SatStream.