Strike has launched bitcoin-backed loans with a “volatility-proof” option that eliminates margin calls and collateral liquidation, backed by a $2.1 billion credit facility from Tether.
How Strike’s bitcoin loans are structured
Strike’s lending product offers two tiers: standard loans and volatility-proof loans. Both are 12-month, bitcoin-backed facilities with a minimum loan size of $10,000 and rates starting at 7.49% APR. Strike also offers a revolving line of credit. For related coverage, see BNB Agent Studio Adds CoinMarketCap Data Access via Binance Pay B402.
Standard loans trigger a margin call when the loan-to-value ratio reaches 70%, giving borrowers a 72-hour window to add collateral or reduce the loan balance. For related coverage, see Vitalik Buterin Says AI Identified His Anonymous Ethereum Proposal Contribution.
If the ratio climbs to 85%, Strike liquidates only enough collateral to restore a healthier LTV, rather than selling the entire position. This partial-liquidation approach contrasts with platforms that sell all pledged bitcoin once a threshold is breached.
The volatility-proof tier goes further. It removes margin calls entirely and promises no collateral liquidation even if LTV rises above 85%. For holders who want to borrow against bitcoin without risking forced sales during sharp drawdowns, this structure is the core differentiator.
Why lower liquidation risk helps borrowers but does not remove every risk
Strike CEO Jack Mallers framed the product around a common borrower fear. “No matter what, don’t touch my Bitcoin. If the price wicks down, leave me out of it,” he said in remarks filed with the SEC.
The design appeals to long-term holders who view forced liquidation as a bigger threat than interest costs. During periods of high volatility, cascading liquidations across lending platforms can amplify bitcoin sell pressure, a dynamic that has led to disputes on prediction markets and strained borrower trust across crypto lending.
That said, risk is being reshaped here, not eliminated. The volatility-proof structure shifts liquidation risk from borrowers to the lender and its funding partners. Strike absorbs the downside exposure, which means the product’s sustainability depends on how well the company and its backers manage that risk over time.
The broader market backdrop at launch was cautious rather than euphoric. The Fear & Greed Index sat at 27, in “Fear” territory, and there was no clear evidence that the lending announcement itself moved bitcoin’s price.
What Tether backing and the limited rollout mean next
Mallers said the volatility-proof product was built in partnership with Tether, which has been expanding its financial infrastructure investments, and was initially offered through Strike’s private client desk before a broader rollout.
The lending operation launches with a $2.1 billion facility from Tether to support demand. That backing gives Strike capacity to absorb collateral risk on volatility-proof loans without immediately needing to liquidate borrower positions during drawdowns.
“We want you to trust us and know that we are who we say we are.”
Jack Mallers, Strike CEO, via Bitcoin Magazine
Strike Lending is a fintech company, not a bank. Loans are issued by Strike Lending or Column N.A., Member FDIC, depending on the borrower’s state. The product is currently available only in select US states and territories.
According to forward-looking remarks at a conference, Mallers suggested the product could reach customers globally in the coming weeks or months, but that timeline remains unconfirmed. As crypto firms like Kraken pursue banking licenses in Europe and stablecoin issuers deepen their lending partnerships, Strike’s no-liquidation model will be tested by whether its funding structure can scale beyond a private-client launch without repricing risk back onto borrowers.
Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Cryptocurrency and digital asset markets carry significant risk. Always do your own research before making decisions.
