A bitcoin loan lets you raise cash without selling your bitcoin. You pledge BTC as collateral, receive dollars or a stablecoin, and get your bitcoin back when you repay. For a long-term holder, that one structural fact is the whole point: you unlock liquidity while keeping your upside and, in most cases, without triggering a taxable sale.
This guide explains how bitcoin-backed loans actually work in 2026, what they really cost once fees are included, the risks that matter most, and how to compare lenders by attribute rather than by some arbitrary ranking. We are a comparison publisher, not a lender, so nothing here is a pick of one provider over another. The lender figures below render live from the same database that powers our comparison tool, so they stay current as terms change.
What a bitcoin loan is, and what "BTC loan" means
"Bitcoin loan," "BTC loan," and "bitcoin-backed loan" all describe the same thing: a collateralized loan where your bitcoin secures the debt. It works like any other secured loan, such as a mortgage or a margin loan against a brokerage account. You hand over an asset as security, borrow against its value, pay interest, and reclaim the asset on repayment.
What makes it specific to bitcoin is the collateral. Because bitcoin is volatile, lenders lend against only a fraction of its value and watch the price closely. That single dynamic, the gap between what your bitcoin is worth and what you borrow, drives almost every term of the loan.
Two things a bitcoin loan is not:
- It is not a sale. You keep ownership and exposure to future price moves.
- It is not unsecured credit. There is generally no credit check, because the bitcoin, not your FICO score, backs the loan.
How bitcoin-backed loans work, step by step
- You apply and the lender sets terms. Loan amount, interest rate, term length, and the maximum loan-to-value ratio.
- You send bitcoin to collateral. Depending on the lender, this goes into the lender's own custody, a qualified third-party custodian, a collaborative-custody multisignature setup where you hold a key, or a smart contract.
- You receive the loan. Usually USD or a stablecoin. Funding can take minutes with DeFi or a few business days with institutional lenders.
- You pay interest over the term. Some lenders require monthly payments, others let interest accrue and settle at the end with no monthly payment.
- You repay and reclaim your bitcoin. Repay the principal plus interest and the collateral is released back to you.
Apply
Lender sets your amount, rate, term, and max LTV.
Pledge BTC
Your bitcoin moves into custody as collateral.
Receive cash
Funds paid out in dollars or a stablecoin.
Pay interest
Monthly, or accrued to the end of the term.
Reclaim BTC
Repay in full and your bitcoin is released.
The mechanics are simple. The risk lives in two places: the price of bitcoin while the loan is open, and who is holding your collateral.
Loan-to-value: the number that controls everything
Loan-to-value, or LTV, is the loan amount divided by the value of your collateral. Borrow against a fraction of your bitcoin and your starting LTV is low; borrow close to the maximum and it is high.
LTV sets two things at once:
- How much you can borrow. Most bitcoin lenders cap origination LTV somewhere between 40 and 60 percent. A 50 percent cap means a given amount of bitcoin gets you up to half its value in cash. If you want a larger loan relative to your stack, see highest-LTV bitcoin loans, and understand that a higher starting LTV means less cushion before trouble.
- How close you are to a margin call. Your LTV rises automatically when bitcoin falls, because the collateral is worth less while the debt stays fixed.
Margin calls and liquidation
Every lender sets an LTV threshold above which they act. Cross it and you get a margin call: a demand to add collateral or pay down the loan to bring LTV back under the limit. Ignore it, or fall too fast, and the lender liquidates, selling enough of your bitcoin to cover the loan.
Liquidation is the outcome to design around, for two reasons. First, it forces a sale at the worst possible time, when the price is falling. Second, that forced sale is a realization event for taxes, so you can owe capital gains on top of losing the collateral.
The defense is a low starting LTV and a clear view of the price that would trigger a call. Our bitcoin loan calculator shows, for any loan size and lender threshold, the exact bitcoin price that would put you at risk.
What a bitcoin loan really costs
The advertised interest rate is not the full cost. Compare lenders on the effective annual cost, which folds in the origination fee, not the headline rate alone. Three components matter:
- Interest rate. The ongoing cost of the borrowed money, quoted as an annual rate.
- Origination fee. A one-time fee, often 1 to 2 percent of the loan, that meaningfully raises the true cost of short-term loans. A 10 percent rate with a 2 percent origination fee on a one-year loan has an effective APR closer to 12 percent.
- Liquidation and other penalties. What the lender charges if it has to sell your collateral, plus any early-repayment or maintenance fees.
This is why every figure we publish is an effective APR inclusive of the origination fee, not the rate a lender prints on its homepage. It is the only number that lets you compare two lenders fairly.
A worked example
Borrow 50,000 dollars for 12 months at a 10 percent interest rate with a 2 percent origination fee:
- Interest for the year: about 5,000 dollars.
- Origination fee: 1,000 dollars.
- Total cost of the loan: about 6,000 dollars, an effective rate near 12 percent.
Against that cost, weigh what selling would have cost instead: the capital-gains tax on the bitcoin you would have had to sell. For many long-term holders sitting on large gains, the tax bill from selling is larger than a year of loan interest, which is the entire case for borrowing. Our sell vs. borrow framework and calculator make that comparison concrete with your own numbers.
Effective APR by lender
Lender facts on this page render live from our comparison database, last verified May 25, 2026. Figures refresh weekly; for the current set and your own loan size, see the comparison tool.
The table below shows each active lender's effective APR, including the origination fee, with rate tiers where the lender publishes them by loan size or LTV. Many lenders price larger loans more cheaply, so the rate you see depends on how much you borrow.
| Lender | Effective APR (incl. origination) | Max LTV |
|---|---|---|
| Arch (Deferred) | 9.49% to 10.99% | 60% |
| Arch (Standard) | 8.99% to 10.49% | 60% |
| CoinRabbit | 11.95% to 16.8% | 90% |
| Figure | 9.84% to 12.45% | 75% |
| Ledn | 9.99% to 11.49% | 50% |
| SALT | 9.95% to 14.45% | 70% |
| Strike | 7.49% to 10.47% | 50% |
| Unchained | 14.18% | 50% |
These are starting points, not a ranking. The cheapest headline number is not automatically the right loan once you weigh custody, term, and how much cushion you keep. Run the comparison tool for figures filtered to your loan size and state.
Custody: who holds your bitcoin
This is the question most ranking lists skip, and it is the one that separated the lenders who survived 2022 from the ones who did not. Ask exactly what happens to your collateral while the loan is open. Bitcoin lenders fall into a few custody models:
- Lender-held custody. The lender holds your bitcoin directly. Simplest to use, highest counterparty risk.
- Qualified third-party custody. Collateral sits with a regulated custodian, segregated from the lender's own funds.
- Collaborative custody. A multisignature arrangement where you hold one of the keys, so no single party, not even the lender, can move the bitcoin alone.
- DeFi smart contract. Collateral is locked in code. No human custodian, but you take on smart-contract and liquidation-bot risk.
Here is how the lenders we track group by custody model today:
A multisignature arrangement where you hold one of the keys, so no single party can move the collateral alone.
Collateral sits with a regulated custodian, segregated from the lender's own funds.
The lender holds your bitcoin directly. Simplest to use, highest counterparty trust.
The lender holds your bitcoin and may re-lend or reuse it while the loan is open.
Rehypothecation: can the lender reuse your collateral?
Within any custody model, the term to interrogate is rehypothecation: whether the lender re-lends or reuses your pledged bitcoin for its own purposes. Rehypothecation is what turned the failures of BlockFi, Celsius, and Genesis from bad loans into lost customer coins. Lenders that contractually do not rehypothecate, or that use collaborative custody where it is structurally impossible, remove that failure mode.
We track this explicitly. The split below groups each lender by whether it rehypothecates collateral; for the lenders that do not, see bitcoin loans with no rehypothecation.
Collateral is not re-lent or reused. The failure mode behind the 2022 collapses is removed.
The lender may put your pledged bitcoin to work elsewhere while the loan is open.
CeFi vs. DeFi bitcoin loans
Centralized and decentralized loans solve the same problem differently.
CeFi lenders, the companies you sign up with, offer fixed terms, human support, fiat payouts to your bank, and, increasingly, custody you can verify. The trade-off is counterparty risk: you trust the company. This fits most borrowers who want predictable terms and dollars in a bank account.
DeFi protocols, which are smart contracts, offer permissionless access, no credit or identity checks, and often lower rates. The trade-offs are variable interest rates, automated liquidations that execute without warning, smart-contract risk, and payouts in stablecoins rather than bank dollars. This fits self-custody-minded borrowers comfortable managing positions on-chain.
Neither is universally safer. CeFi concentrates risk in a company; DeFi concentrates it in code and market mechanics.
Bitcoin loans vs. selling: the tax angle
The reason bitcoin loans exist as a strategy is tax timing. Under current US treatment, selling bitcoin realizes a capital gain, while borrowing against it generally does not, because posting collateral is not a sale. The loan proceeds are not income either. We cover the rules, the rehypothecation gray area, and the cases where the line can blur in Is borrowing against bitcoin a taxable event?
The short version: borrowing defers the tax reckoning that selling triggers, in exchange for taking on interest cost and liquidation risk. Whether that trade is worth it depends on your unrealized gains, your time horizon, and your tolerance for a margin call.
How to compare bitcoin lenders
We do not rank lenders from first to last, because the right loan depends on what you are optimizing for. Instead, compare on the same factors, in roughly this order of importance. You can read the full approach on our methodology page.
- Custody and rehypothecation. Where your bitcoin sits and whether it can be re-lent.
- Effective APR, including origination fee. The true annual cost, not the headline rate.
- Maximum LTV and margin-call threshold. How much you can borrow and how much cushion you keep.
- Term, payment structure, and prepayment terms. Monthly payments versus accrued interest, and whether you can repay early without penalty.
- Funding speed and availability. How fast you get cash and whether the lender operates in your state.
- Track record. Years operating, loans funded, and history through the 2022 to 2023 stress.
For a side-by-side view filtered to your situation, and for in-depth write-ups of each lender, use the comparison tool and the individual lender reviews.
Who bitcoin loans suit, and who they do not
A bitcoin loan tends to make sense when:
- You have a large unrealized gain and selling would trigger a heavy tax bill.
- You need cash for a defined purpose and have a clear repayment plan.
- You are a long-term holder who wants to keep upside exposure.
- You can borrow at a low LTV and absorb a sharp drawdown without a forced sale.
It tends not to make sense when:
- You would borrow at a high LTV with no cushion, leaving little room before a margin call.
- You would use the proceeds to buy more bitcoin, stacking leverage on a volatile asset.
- You cannot comfortably service the interest or repay on schedule.
- You are not clear on the custody arrangement or whether your collateral can be rehypothecated.
What changed since BlockFi and Celsius
The lenders that failed in 2022 and 2023 mostly failed for one reason: they took customer collateral and re-lent or invested it, then could not return it when markets turned. The 2026 landscape is shaped by the response to that. Borrowers now ask where collateral sits and whether it can be rehypothecated; lenders that segregate collateral, use collaborative custody, or contractually refuse to rehypothecate now advertise it as a feature. The practical lesson is unchanged: a low advertised rate means little if the lender can do something with your bitcoin that you did not agree to.
How to get a bitcoin loan
- Decide how much you need and at what LTV. Lower LTV means more safety margin. Model the margin-call price first with the calculator.
- Shortlist lenders on custody and effective APR, not the headline rate. Use the comparison tool and read the reviews.
- Confirm availability in your state and the funding currency, whether that is USD to your bank or a stablecoin.
- Read the collateral terms. Custodian, rehypothecation, margin-call threshold, and liquidation process.
- Apply and fund. With most bitcoin lenders there is no credit check; the collateral underwrites the loan. See no-credit-check bitcoin loans.
This is not financial advice
borrow/on/bitcoin is a comparison publisher, not a lender, broker, or financial or tax advisor. Bitcoin loans carry real risk, including the forced sale of your collateral, and tax treatment depends on your situation and on rules that can change. Compare current terms on our tool, and confirm anything here with a qualified professional before acting on it.