Borrowing against your Bitcoin means pledging BTC as collateral for a loan in dollars or stablecoins. The position stays yours. The loan funds whatever you need. No sale, no capital-gain event, no credit pull. The structure is older than crypto — we just made it faster.
How a crypto-backed loan actually works
You move BTC into a custodial or smart-contract escrow. The lender extends credit at a percentage of the collateral value (typically 30–70% loan-to-value). You pay interest — often 5–9% APR in 2026 for prime BTC collateral, lower than personal lines of credit and dramatically lower than credit cards. Repay anytime; collateral returns. Don’t repay; collateral is liquidated at the agreed threshold.
Why HNW principals use this instead of selling
- No taxable event. Pledging is not selling. Your basis is preserved, capital gains are not realized.
- Liquidity without disposition. Buy property, fund a business, finance a vehicle — with cash, not crypto.
- Asymmetric upside. If BTC appreciates while the loan is outstanding, you keep the upside on the full position.
What to look at before you sign
Three things separate the right deal from the painful one: liquidation threshold, collateral custody, and rate transparency. A liquidation buffer too tight will turn a normal market drawdown into a forced sale. Custody arrangements determine whether you actually own the BTC during the loan term. Rate transparency matters because some lenders quote teaser rates that step up after 30 days.
Bitcoin loan vs. selling — the math
$500K BTC at 50% LTV = $250K loan at 7% APR = $17,500 interest/year. Selling that same BTC: roughly 20–37% capital gains tax, plus you lose all future appreciation. The loan keeps the position and the basis intact. Most principals run the math once and never look back.
How ARCrypto helps
We don’t originate the loan. We teach the structure, vet the providers, model the liquidation math against your actual portfolio, and coordinate with your CPA and counsel. Every member walks in already knowing what threshold to demand and what custody arrangement to refuse.
Book a private call to walk through your specific position. Or read more in our Crypto-Collateralized Loans field notes.