What Options Are Available for Borrowing Against Bitcoin Holdings Without Selling Them? | The Bitcoin Adviser
Bitcoin-Backed Loans

What Options Are Available for Borrowing Against Bitcoin Holdings Without Selling Them?

Bitcoin-backed loans allow you to access liquidity from your Bitcoin holdings without selling, avoiding capital gains taxes and maintaining your position. This comprehensive guide compares all major options, from Bitcoin-to-Bitcoin lending to traditional fiat-backed loans, helping you understand the trade-offs, risks, and when borrowing makes sense.

Quick Summary

  • Bitcoin-to-Bitcoin loans: Receive Bitcoin as the loan (no margin calls, no counterparty risk after receiving funds)
  • Fiat-backed loans: Receive USD or stablecoins (margin call risk, lower LTV ratios, counterparty exposure)
  • Key considerations: LTV ratios, fee structures, margin call risk, counterparty risk, and tax implications
  • Best for: Terminal Bitcoiners seeking capital efficiency, strategies targeting Bitcoin-plus returns
  • Not for: Borrowing to HODL Bitcoin, non-appreciating purchases, beginners
Why Borrow Against Bitcoin?

Common Reasons People Borrow Against Bitcoin

Tax Benefits

Borrowing against Bitcoin avoids triggering capital gains taxes that would occur from selling. This is especially valuable for Bitcoin with low cost basis, where selling would create significant tax liability.

Maintaining Position

Access liquidity while keeping your Bitcoin stack intact. This allows you to maintain your long-term Bitcoin position while accessing funds for investments, purchases, or opportunities.

Terminal Bitcoiners

For Bitcoiners who've reached "Terminal Bitcoin"—maxed out accumulation through selling assets, downsizing, and redirecting every spare dollar—borrowing enables capital efficiency to grow holdings further.

Outperformance Strategies

Use borrowed funds to invest in assets that may outperform Bitcoin (Bitcoin treasury companies, options strategies, real estate) while maintaining your original stack.

Platform Comparison

Bitcoin-to-Bitcoin vs. Fiat-Backed Loans

There are two main types of Bitcoin-backed loans: Bitcoin-to-Bitcoin (BTC-to-BTC) where you receive Bitcoin as the loan, and fiat-backed loans where you receive USD or stablecoins. Understanding the difference is critical for risk management.

Loan My Coins: Bitcoin-to-Bitcoin Lending

Built by The Bitcoin Adviser, Loan My Coins offers the world's only Bitcoin-for-Bitcoin loan product. This unique model eliminates margin calls, counterparty risk after receiving funds, and currency exposure.

  • 95% LTV: Deposit 10 BTC, receive 9.5 BTC instantly (nearly double what fiat loans offer)
  • 5% Fixed Fee: One upfront fee, no variable interest, no hidden costs
  • No Margin Calls: Market swings don't force liquidation—your stack stays intact
  • Zero Counterparty Risk: You keep the full value of borrowed Bitcoin upfront, unlike fiat loans where counterparty failure leaves you holding fiat
  • 1 Bitcoin Minimum: Built for serious HODLers to tap into significant BTC value
  • 12-Month Terms: Renewable annually for up to 5 years
  • Risk Score: 10 (Low) vs. competitors 29-49 on Zone21's risk framework

How it works: Stake your Bitcoin (e.g., 10 BTC), receive 95% back as borrowed Bitcoin (9.5 BTC) after 5% upfront fee, use the borrowed Bitcoin for 12 months, repay the original staked amount (10 BTC) to reclaim your 10 BTC. Learn more at loanmycoins.com →

Tax clarification (Australia): According to an ATO Private Ruling, the transfer of Bitcoin to the segregated wallet under this specific loan agreement does not constitute a disposal for CGT purposes. Consult your tax professional for advice specific to your jurisdiction.

Platform Loan Type LTV Ratio Fee/APR Margin Calls Counterparty Risk
Loan My Coins BTC-to-BTC 95% 5% upfront No Minimal (you keep borrowed BTC)
Coinbase USDC (fiat) Up to $100K Variable Yes High (counterparty exposure)
Strike USD (fiat) 50% 9.5% APR Yes (at 70% LTV) High
Ledn USD/USDC (fiat) 50% 12.4% APR Yes High
Xapo Bank USD (fiat) 20-40% 10% APR Yes High
BitBacked USD (fiat) 50% 9.75% APR Yes High

Key Differences: BTC-to-BTC vs. Fiat Loans

Bitcoin-to-Bitcoin (Loan My Coins)

  • No margin calls (price volatility doesn't trigger liquidations)
  • No counterparty risk after receiving borrowed BTC
  • Higher LTV (95% vs. 50% typical)
  • Fixed fee structure (predictable costs)
  • You maintain Bitcoin exposure throughout

Fiat-Backed Loans (Traditional)

  • Margin call risk (forced liquidation if price drops)
  • Counterparty risk (lender failure leaves you with fiat)
  • Lower LTV ratios (typically 50%)
  • Variable interest rates (costs can increase)
  • Currency exposure (receiving fiat, repaying in Bitcoin)
Risks and Considerations

Understanding the Risks of Borrowing Against Bitcoin

Investment Underperformance Risk

Your investments must outperform Bitcoin's growth plus fees. If Bitcoin grows 20% and you pay 5% fees, your $950,000 investment needs >25% return to profit after repaying 10 Bitcoin. If investments underperform, you could end up with less Bitcoin overall.

Counterparty and Custody Risks

Past failures like BlockFi and Celsius highlight the dangers of entrusting assets to lenders. While BTC-to-BTC loans mitigate this (you keep borrowed BTC upfront), any mishandling could lead to loss. Always verify lender security practices.

Tax Implications

Avoiding capital gains by not selling is appealing, but missteps could trigger taxable events. Consult qualified tax professionals for advice specific to your jurisdiction. In Australia, Loan My Coins has an ATO Private Ruling for this specific arrangement.

Not for Beginners

Borrowing adds inherent risk to any portfolio. This approach suits only sophisticated investors comfortable with volatility who have reached "Terminal Bitcoin"—maxed out organic accumulation and are willing to assess risks personally.

Critical Warning: Borrowing to HODL Bitcoin costs 5% with no upside—this doesn't make sense. Loan My Coins and similar products are designed for strategies like investing to outperform Bitcoin, not for simply holding more Bitcoin. Using borrowed funds for non-appreciating purchases (cars, vacations) turns fees into exorbitant costs in Bitcoin terms.

When It Makes Sense

When Borrowing Against Bitcoin Is Appropriate

Terminal Bitcoiners

You've stacked as much as you can, sold assets, and maxed out savings. At this stage, growing your position further requires capital efficiency: staking Bitcoin to borrow Bitcoin for outperformance strategies.

Outperformance Strategies

Investing borrowed funds in Bitcoin treasury companies (MSTR, Metaplanet), options-based strategies, or other assets targeting Bitcoin-plus returns. Your goal is to beat Bitcoin's growth plus fees.

Real Estate or Major Purchases

Accessing liquidity for property purchases, business investments, or other major expenses while maintaining your Bitcoin position and avoiding capital gains taxes.

Tax Optimization

For Bitcoin with low cost basis, borrowing avoids triggering significant capital gains taxes that would occur from selling, while still accessing liquidity.

When It Doesn't Make Sense

When Borrowing Against Bitcoin Is Not Appropriate

Borrowing to HODL Bitcoin

Borrowing Bitcoin to simply hold more Bitcoin costs fees (5%+) with no upside. This erodes your stack over time and doesn't make financial sense.

Non-Appreciating Purchases

Using borrowed funds for cars, vacations, or other depreciating assets turns the 5% fee into an exorbitant cost in Bitcoin terms, eroding stacks over time.

Beginners or Low Risk Tolerance

If you're uncomfortable with volatility, haven't reached Terminal Bitcoin, or are new to Bitcoin, borrowing adds unnecessary complexity and risk.

Lifestyle Expenses

Using Bitcoin-backed loans for everyday expenses or lifestyle purchases is expensive and unsustainable. Only borrow when you have a clear outperformance strategy.

How It Works

Step-by-Step Process

Loan My Coins Process (Example)

  1. Stake Bitcoin: Send your Bitcoin (minimum 1 BTC) to the secure loan provider wallet
  2. Receive Loan: Get 95% of staked amount back as borrowed Bitcoin (5% fee deducted upfront). Example: Stake 10 BTC, receive 9.5 BTC
  3. Sell or Invest (Optional): You can hold the borrowed BTC, sell for fiat, or invest in assets targeting Bitcoin-plus returns
  4. Repay or Roll: At 12 months, repay the full staked amount (10 BTC) or roll for another year by staking an additional 5% (renewable up to 5 years)
  5. Reclaim Bitcoin: Once repaid, your original Bitcoin is returned in full—untouched

Learn more: Visit loanmycoins.com/how for detailed process information, or use the loan calculator to model your scenario.

Resources

Learn More About Bitcoin-Backed Loans

Loan My Coins

Educational Content

Ready to Explore Bitcoin-Backed Loans?

If you've reached Terminal Bitcoin and want to explore capital efficiency strategies, Loan My Coins offers Bitcoin-to-Bitcoin lending with no margin calls and minimal counterparty risk. Use the calculator to model your scenario, or contact us to learn more.

Try the Loan Calculator Contact Us Visit Loan My Coins
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