The product lets users protect against bitcoin liquidations. But the price is high interest. We break down what’s known about Strike’s new offering.
Financial services platform Strike has introduced a new bitcoin-backed lending product that eliminates margin calls and forced liquidations. As Strike CEO Jack Mallers put it:
“No matter how far bitcoin falls, the client’s collateral stays put.”
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The price of that protection is a steep annual rate of up to 14.2%, a six-month term, and a strict repayment requirement. The product comes in response to feedback on Strike’s first lending service, launched in May 2025, which triggered mass liquidations during bitcoin’s 54% drop from peak to trough.
The loans are available in most US states and can be taken out by individuals and businesses. Other market participants offering bitcoin-backed loans include Binance, Coinbase, Nexo, and Xapo Bank.
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How Strike’s Volatility-Protected Loans Work
The maximum loan-to-value ratio is 45%: against $100,000 in bitcoin (BTC) collateral, you can borrow up to $45,000. The annual rate is 2.95% points higher than Strike’s standard product.
According to Mallers, the premium goes toward additional hedging to protect all parties.
“The secret ingredient is that we take extra fees and direct them to hedging,” he explained. “If you’re okay with a slightly shorter term and a slightly higher fee, no price movement can liquidate you.”
That said, the product isn’t entirely “liquidation-proof.” If a borrower misses a payment, there’s a 10-day grace period to deposit funds or contact Strike to explain the situation. If no payment comes and the company gets no response for several weeks, it can begin selling collateral to cover the overdue amount.
“That’s why we call it ‘volatility-protected,’ not ‘liquidation-proof,’” Mallers added.
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Why It Matters: Crypto Lending and Volatility
Over the past 12 months, bitcoin has dropped 54% from its all-time high of $126,080 to a low of $58,190. At the time of publication, the cryptocurrency trades at roughly $61,900, down 2% on the day.
According to a Ledn report, 88% of surveyed investors would consider crypto-backed loans, but only 14% actually use them. Ledn cited trust in products and market volatility as the main reasons for the sixfold gap between interest and actual usage.
Investor Fred Kruger said the new product “could eliminate one of bitcoin’s biggest structural problems: forced selling during market crashes.” Rather than volatility triggering automatic liquidations, defaults would be driven by borrowers’ inability to service debt–not temporary price swings.
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Source: Original Article
