What Triggers Liquidation in a Bitcoin-Backed Loan? 2026 Guide
What Actually Triggers Liquidation in a Bitcoin-Backed Loan? BetterLending Research Desk · Liquidation Mechanics & Collateral Risk · Updated May 2026 Direct answer: Liquidation in a Bitcoin-backed loan is triggered when the loan-to-value ratio (LTV) rises above the platform's liquidation threshold — typically between 83% and 90% LTV. LTV rises automatically as BTC price falls: a fixed loan balance against shrinking collateral value. When the threshold is breached, the platform sells the collateral — automatically, without requiring borrower consent — to recover the outstanding loan. The trigger is mathematical, not discretionary. It is determined entirely by the entry LTV, the BTC price movement, and the platform's defined thresholds. Learn Borrow Against Bitcoin: How Bitcoin-Backed Loans Work, What the Risks Are, and How to Survive the Market Introduction Most borrowers entering a Bitcoi...