How to borrow against bitcoin

Bitcoin is one of the few assets you can borrow against in minutes, at any hour, without a bank meeting. Doing it well is another matter: it takes the right loan-to-value, a clear view of the costs and a lender that keeps your coins safe. This guide covers all three, and the alternatives.

The principle in one minute

A bitcoin-backed loan is a Lombard loan applied to BTC. You transfer bitcoin to the lender as collateral, receive cash — at Lombard Private, by bank transfer in euros, dollars, pounds or Swiss francs — and pay interest on what you borrow. When you repay, the same bitcoin comes back to you.

• You keep your position. If bitcoin rises while you borrow, the gain is yours.
• You borrow a share of its value, the loan-to-value (LTV), never the whole of it.
• The lender is protected by the collateral, through margin calls and, as a last resort, a partial sale.
• You choose when to repay, on an open-ended credit line or a fixed term.

How much you can borrow

The amount depends on the value of the bitcoin you pledge and on the loan-to-value you choose. Our maximum for bitcoin is 60%: with bitcoin at €73,814, one BTC supports a loan of up to €44,289. Most needs are better served lower down. Here is what a €25,000 loan requires at each setting, with today’s reference price:

For a €25,000 loan, with Bitcoin at €73,814 (reference price at 04:58 UTC). Rates are all-in APRs; percentages show the price fall that triggers each event.

Two formulas cover every case: the maximum loan is the value of your bitcoin multiplied by the LTV, and the bitcoin you need is the loan divided by the LTV, then by the price. Loans start at €1,000; from €250,000 a dedicated advisor follows your loan, and above €2,000,000 our private desk sets tailored terms. Our guide to loan-to-value explains how to choose your level.

What it costs

Compare lenders on the all-in annual percentage rate, not on a headline rate, and look for the fees that can sit around it: origination fees deducted from the loan, administration or custody fees, withdrawal fees and charges for repaying early. At Lombard Private the APR is the whole cost: there is no origination, administration or early-repayment fee.

Interest on a €25,000 loan, paid monthly. Interest accrues daily, so repaying early means paying only for the days you borrowed.

Larger loans cost less: the rate falls by 0.5 point from €250,000 and by 1.0 point from €1,000,000. You can pay interest monthly or let it accrue and settle it when you repay; paying monthly keeps your loan-to-value from creeping up. Euro and pound payouts are free; SWIFT transfers are charged at cost. If a liquidation ever happens, a fee of 1% applies to the amount sold. See all rates and the fee schedule.

The risks specific to bitcoin

Borrowing against bitcoin combines a very liquid asset with a very volatile one. Its main risks are well known, and each has an answer.

• Deep, fast falls. Bitcoin has repeatedly lost more than half of its value from a previous peak, sometimes within months, and large daily moves are common. Borrowing at 50%, a fall of about 29% triggers a margin call and about 38% a partial liquidation; at 30%, those figures become 57% and 63%.
• A market that never closes. Prices move at night, at weekends and on holidays. Alerts must reach you wherever you are, which is why browser notifications are worth enabling.
• Forced selling into a falling market. When prices drop quickly, liquidations across the market can add to the fall. A partial liquidation limits how much of your bitcoin is sold, but a sale is always final.
• Custody and counterparty risk. In 2022, several large crypto lenders froze withdrawals and later filed for bankruptcy, in part because they had lent their clients’ collateral on. Who holds your coins, and what they may do with them, matters more than the rate.
• Wrapped bitcoin. Tokens that represent bitcoin on other blockchains add smart-contract and custodian risk. We accept native BTC only.
• Tax on a liquidation. A loan is usually not a disposal, but a sale of collateral can be taxable where you live.

Our risk disclosure sets these out in full, and the liquidation price calculator shows where your own thresholds would sit.

How to choose a lender: ten questions

Lenders differ less on rates than on the questions below, and the answers are usually buried in their terms. Ask them before you pledge anything.

1. Is my bitcoin held at its own address, which I can check on a block explorer?
2. Does the contract exclude lending, staking or reusing my collateral?
3. Is it held in cold storage, and can any single person move it?
4. At what loan-to-value do the margin call and the liquidation happen?
5. How long do I have to act on a margin call?
6. Is a liquidation partial or total, and is any surplus returned?
7. What does the loan really cost: origination, early-repayment and withdrawal fees?
8. Is the loan paid to my bank, in my currency, or only in stablecoins?
9. How will the lender contact me, and how do I recognise an impostor?
10. Can I repay at any time, in part or in full, without a penalty?

Step by step with Lombard Private

1. 1 minute

   Open an account

   Generate a 16-digit account number and choose a password; add a passkey or an authenticator app if you wish. No identity document, email or phone number.

2. Instant

   Price your loan

   Choose the amount, the currency and the loan-to-value. You see the rate, the monthly interest, the margin-call price and the liquidation price before committing.

3. 2 confirmations

   Send your bitcoin

   Transfer native BTC to the native SegWit (bc1…) address created for your loan. It is credited after 2 confirmations, about 20 minutes on average.

4. Within the hour

   Receive your money

   The loan is sent to the bank account you named, typically within the hour.

5. Any time

   Repay and get your bitcoin back

   Repay in full or in part whenever you like, by bank transfer or in USDT or USDC. Your bitcoin returns to the address you choose, typically within the hour.

To see today’s rates and price a loan with the live simulator, go to bitcoin-backed loans; the full process is described in how it works.

The alternatives

A bitcoin-backed loan is one of several ways to raise money from bitcoin. Each has its place.

Swipe the table to see every column. General characteristics; terms vary from one provider to another.

If you are unsure whether to borrow at all, our guide Borrow or sell? sets out the break-even and the cases where selling is the better answer.

Seven habits of careful borrowers

• Start at 50% or below, even when 60% is available.
• Enable browser notifications, so that an alert reaches you even when you are not logged in.
• Keep a reserve of bitcoin or stablecoins you could add within 72 hours.
• Pay interest monthly if you want your loan-to-value to stay where you set it.
• Note your margin-call price and check it against the market when bitcoin moves sharply.
• Repay in instalments when you can: each repayment lowers your loan-to-value and your interest.
• Keep your recovery kit offline, and never share it, nor your password, with anyone.