Opening a bitcoin-backed loan lets you unlock your bitcoin’s buying power, without having to sell your bitcoin.

Established bitcoiners face a dilemma: how do you access your wealth, while maintaining your bitcoin position?

Bitcoin-backed loans offer a potential solution.

Before opening a bitcoin-backed loan:

Prior to starting a loan there are some considerations to keep in mind:

1. Bitcoin requirement: Get sufficient bitcoin to accommodate your desired loan size and the lender's initial LTV requirements (e.g., a 50% LTV means you can borrow up to 50% of your collateral's value). Due to bitcoin's price volatility, some borrowers may elect to over-collateralize their loan to mitigate the risks associated with price fluctuations.
2. Plan for cash use: Have a clear plan for the cash, as you'll be obligated to repay the loan plus interest. If you’re investing the funds, ensure that the investment is projected to generate sufficient risk-adjusted returns to cover the interest expenses on your loan, otherwise it may not be a good financial move.
3. Risk evaluation: Understand the inherent loan risks, including giving up direct control of your bitcoin, counterparty risk with the lender, and price volatility risk, potentially leading to liquidation.
4. Lender selection: Carefully compare lenders, considering interest rates, fees, loan minimums/maximums, reputation, user interface, and terms/conditions.

Evaluating a bitcoin-backed lender:

A key aspect of opening a bitcoin-backed loan is finding a lender that best suits your needs. Before proceeding, it’s useful to ask yourself the following:

• Interest rates: The cost of the loan should be weighed in relation to your intended use of the cash, as this will directly impact the loan’s overall profitability.
• Fees: Loans can have multiple fees, including opening, closing, collateral additions, early/late payments, and liquidation fees. You need to look at both interest rates and fees can you get the full picture of the loan’s total cost.
• Loan terms: The loan minimums, maximums, duration, initial maximum Loan-to-Value (LTV) ratio, and LTV thresholds should be clarified, as these parameters define the loan's boundaries and the conditions under which collateral might be at risk.
• LTV management: Due to bitcoin’s price volatility, it’s important to be able to easily monitor and manage your loan’s risk through LTV adjustments. Consider the lender’s user interface, and how easy or difficult it is to track your loan’s health, get notified, and make adjustments if need be.
• Loan flexibility: The availability of options such as early loan closure or adjustments to the loan size can provide valuable adaptability during the loan term.
• Fund transfer options: The available options for depositing and withdrawing bitcoin (e.g., on-chain, Lightning) or cash (wires, ACH, p2p payments) and their associated fees should be explored, as these can significantly impact the efficiency of moving your assets.
• Lender trust: The trustworthiness of the lender should be seriously assessed, as the security and reliability of your lender will be key in ensuring the return of your collateral.

How to open a bitcoin-backed loan with Strike:

Strike offers Bitcoin-backed loans to eligible customers, providing a quick and simple loan origination process with a straightforward user interface for easy loan monitoring and management.

Before you get started, make sure you meet the eligibility requirements and have sufficient bitcoin to accommodate your desired loan size and LTV ratio. Additionally, read through the available resources, including FAQs, walkthroughs, and articles to understand the potential risks and benefits.

When you’re ready to proceed, make sure your Strike app is up to date, then open the app, visit your Cash tab, and select the "Bitcoin-backed loan" card to begin.

###Opening your loan:

1. Select loan type: Choose between "Monthly Interest" (interest paid monthly, principal paid at maturity) or "Payment at Maturity" (entire repayment due at maturity).
2. Adjust loan amount: Use the slider to select your desired loan amount. This will affect the minimum required collateral and total loan costs.
3. Adjust collateral amount: Use the slider to select your bitcoin collateral amount. Remember, the minimum collateral is determined by your loan size, and over-collateralizing reduces the bitcoin price thresholds for margin calls and liquidations.
4. Choose payment source: For monthly payments (if applicable), select to pay from either your cash, bitcoin, or linked bank account. For your final principal payment, or for the only payment for Payment at Maturity loans, select to pay from your cash balance or to liquidate part of your bitcoin collateral.
5. Enable notifications: If you haven’t already, make sure you have notifications enabled for the Strike app to receive important loan updates.
6. Preview loan details: Review your loan configuration before proceeding to the final step.
7. Review and sign agreement: The loan agreement will be emailed to your account for ease of review. Upon reviewing it, return to the Strike app to sign your screen and tap “Initiate loan” to complete the process.

Upon completing the process, bitcoin will be debited, and your cash will be credited to your Strike account, available to withdraw externally within one business day.

After opening your loan

After opening your loan, your Cash tab will have an LTV Tracker, letting you review your loan’s health at a glance. By tapping your LTV Tracker, you can open your Loan Center, where you can monitor and manage your loan:

• Track your LTV: The large percentage at the top of your Loan Center displays your current LTV. Tap the question mark for detailed LTV threshold information, or the LTV chart to review LTV history, including warning, margin call, and liquidation levels.
• Manage your LTV: The "Manage LTV" button below the LTV percentage provides options to lower your LTV and reduce risk by paying cash to reduce principal or adding more Bitcoin collateral.
• Manage payments: The Payments Tile (bottom left) shows your upcoming payment and due date, with a loan progress visualization. Tapping it lets you change payment sources for monthly interest (if applicable) or maturity payments, view your payment schedule, or close your loan early (available 60 days after opening).
• Review collateral: The Collateral Tile (bottom right) displays your current collateral value, with a visualization tracking it over time above a dotted line indicating your current margin call price. Tapping it shows a detailed collateral chart with value and warning, margin call, and liquidation thresholds.
• Check loan details: At the bottom of the Loan Center, you'll find your loan amount, collateral, and Bitcoin prices for margin calls and liquidations. These amounts adjust automatically when you add collateral or repay principal.

At the end of your loan (either at maturity, or through early repayment) your loan can be archived, and you can open a new one.