Your Loan-to-Value (LTV) ratio represents your loan amount compared to the current value of your bitcoin collateral, and is a crucial metric for bitcoin-backed loans.

How your LTV works:

When you open a bitcoin-backed loan with Strike, the maximum initial LTV ratio is 50%, meaning you can borrow up to 50% of the cash value of your collateral. This LTV ratio protects the lender in case you default on the loan, since there is sufficient collateral available to liquidate and recover the funds. Due to bitcoin's price volatility, the value of your collateral fluctuates, directly impacting your LTV ratio. If your collateral’s value falls significantly, your LTV would rise, potentially triggering a margin call or liquidation:

• Margin call: If your LTV reaches 70%, a margin call will be triggered, requiring you to lower your LTV to 60% or below by adding collateral or repaying part of your loan within 24 hours to avoid partial collateral liquidation.
• Liquidation: If your LTV ever reaches 85%, a partial collateral liquidation will be automatically triggered to return your LTV to 60%.

Important LTV thresholds:

You can monitor and manage your LTV ratio in your Strike app’s Cash tab by viewing your LTV Tracker or by tapping it to open your Loan Center. Remember, a lower LTV ratio means a reduced risk of margin calls or liquidations.

• Healthy LTV (below 60%): Your loan is in good standing and no action is required.
• Warning LTV (60% - 70%): Your LTV is approaching a margin call threshold. Consider adding more collateral or repaying part of the loan to mitigate risk.
• Margin call (70%): Your LTV has triggered a margin call, requiring you to lower your LTV to 60% or below within 24 hours, otherwise part of your collateral will be liquidated to return your LTV to 60% for you.
• Liquidation (85%): Your LTV reached a critical threshold, automatically triggering an immediate partial collateral liquidation to return your LTV to 60%.

Learn more about margin calls and liquidations or how to manage your LTV.