Strike introduces Bitcoin loans protected from volatility during bear market downturn, with higher rates
Borrowers seeking protection from margin calls and forced liquidations must accept interest rates as steep as 14.2% along with strict payment deadlines, according to Strike CEO Jack Mallers.
Strike, a financial services platform focused on Bitcoin, has introduced a Bitcoin-backed loan product designed to be "volatility-proof," removing the threat of margin calls and forced liquidations during what remains a challenging bear market, though the offering requires borrowers to maintain timely payments and accept interest rates approaching 14%.
During a Tuesday announcement, Jack Mallers, CEO of Strike, explained that the new offering was developed based on extensive customer input regarding Strike's initial Bitcoin loan product, which debuted in May 2025 and resulted in numerous liquidations during a period when Bitcoin (BTC) plummeted 54% from its highest point to its lowest.
"No margin calls. No price liquidations. No matter how far bitcoin falls, your bitcoin doesn't move," Strike CEO Jack Mallers stated regarding the newly launched Bitcoin loan product. However, the compromise involves a costly interest rate, a condensed six-month loan duration, and a requirement to maintain punctual payments to prevent liquidation, according to Mallers.
The Bitcoin sector has dedicated nearly a decade to developing financial products designed to broaden Bitcoin's utility beyond functioning as a savings vehicle. However, a June report from crypto lending platform Ledn revealed that despite 88% of surveyed crypto investors expressing interest in crypto-backed loans, a mere 14% actually utilize them.
According to Ledn, concerns about crypto-lending product reliability and market volatility represent primary factors contributing to this significant 6-to-1 "crypto collateral gap" that has hindered widespread adoption.
Market volatility has proven to be among the most significant barriers to this initiative, given that Bitcoin has experienced declines of 30% or greater in 10 out of the last 12 years, and has undergone drawdowns of 50% or more on four separate occasions since 2014, as Mallers pointed out.
Additional crypto market entities providing Bitcoin-backed loan services include Binance, Coinbase, Nexo and Xapo Bank.
Strike charges double-digit interest
For the volatility-proof loan offerings, the maximum initial loan-to-value ratio stands at 45%, which means a customer depositing $100,000 worth of Bitcoin as collateral would be eligible to borrow up to $45,000, while the annual percentage rate (APR) exceeds Strike's conventional loan product by 2.95 percentage points.
"The secret sauce is that we're taking the extra charge that we're giving you guys and we're putting it on extra hedges in the market to protect all of us."
The standard Bitcoin loan products from Strike feature annual percentage rates ranging from 7.75% to 11.25%, which indicates the volatility-proof alternatives could command interest rates spanning from 10.7% to 14.2%.
"If you're OK with a slightly shorter term and a little bit higher of a fee, there is no price move that can liquidate you," Mallers said.
Throughout the previous year, Bitcoin has declined 54% from its peak price of $126,080 achieved in October to $58,190 as of June 25.
Fred Krueger, a Bitcoin investor, suggested the loan product "could eliminate one of Bitcoin's biggest structural problems: forced selling during market crashes."
"Instead of volatility causing automatic liquidations, defaults would be driven by borrowers' inability to service debt rather than by temporary price swings," he said.
"Great product for those who need near-term liquidity and don't want to risk liquidation," added Vibes Capital Management executive chairman Rob Topping, though he also acknowledged the 14% APR was expensive.
Customers must pay up or face consequences
Should a customer fail to make a scheduled payment, they are granted a 10-day window to submit the payment or reach out to Strike to discuss their financial circumstances, according to Mallers.
Failure to remit payment following the conclusion of that 10-day grace period could result in Strike beginning to liquidate their Bitcoin holdings to satisfy the outstanding balance, Mallers cautioned.
"If we don't hear from you for a few weeks, then I may have no choice but to sell off some of the Bitcoin because it seems like you're doing a hit-and-run."
"That's why we call it 'volatility-proof,' not 'liquidation-proof," Mallers added.
The Bitcoin loan products are available in the majority of US states and may be obtained under both individual and corporate names. The loans can be utilized for new borrowing, refinancing existing debt or consolidating multiple obligations.
Although the minimum loan threshold differs across states, personal loans require a minimum of $10,000, whereas businesses operating in select states may access loans starting at just $5,000.