Strike, a Bitcoin financial services company, has launched a groundbreaking loan product that allows users to borrow against their Bitcoin without the risk of forced liquidation due to price volatility.
CEO Jack Mallers emphasized, "While volatility is inevitable, liquidation is not," highlighting that the loan structure eliminates margin calls and price-based liquidations entirely. Borrowers must keep making payments, but their Bitcoin collateral remains untouched even if the market crashes.
The product, initially available as fixed-term loans in select U.S. states, is backed by a $2.1 billion credit facility established in partnership with stablecoin issuer Tether. However, default conditions do apply: if a borrower fails to pay interest or principal, a 10-day grace period is triggered before partial liquidation of the collateral occurs. This contrasts with traditional dynamic loan-to-value (LTV) models that automatically sell assets when prices dip.
The launch comes at a time when Bitcoin's price stabilizes around $63,000, after a period of contraction. Strike's move could attract long-term holders seeking liquidity without sacrificing their positions, and may influence the broader crypto lending market toward more borrower-friendly models.
