Crypto loan LTV calculator
LTV and liquidation math for BTC/ETH-backed loans.
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Crypto-backed loans let you borrow USD against BTC or ETH without selling — no taxable event, keep upside exposure, get liquidity. The tradeoff: if your collateral drops in value, you get liquidated. This calculator shows the price BTC has to hit for your loan to blow up.
Enter collateral amount in USD, loan amount in USD, and the lender's liquidation LTV (typically 70-85%). The output is current LTV, liquidation price, and the safety buffer between spot and liq.
The liquidation mechanism differs across platforms in ways that matter. On Aave (DeFi), liquidation is instantaneous the moment your health factor drops below 1.0 — a bot executes within the same block. On Ledn and Nexo (CeFi), there's usually a margin call period of 24-72 hours before forced liquidation. Unchained Capital uses a collaborative custody model where you retain control of your keys throughout the loan term, requiring your signature to move collateral.
Interest rates on crypto loans vary from 5.9% to 14% APR depending on LTV and platform. Ledn charges 10.9% APR for standard BTC loans. Unchained charges 11-14% depending on loan size. Aave's variable USDC borrow rate floats with utilization — it hit 14% during peak demand periods in 2023. For a $40,000 loan, the difference between 6% and 14% APR is $3,200/year in interest. Locking in fixed-rate CeFi is often better than riding variable DeFi rates unless you can monitor and rebalance constantly.
Borrow $40,000 against 1 BTC at $65,000 (Ledn-style terms, 70% liquidation LTV)
Current LTV: $40,000 ÷ $65,000 = 61.5%.
Liquidation at 70% LTV means collateral value needs to drop to: $40,000 ÷ 0.70 = $57,143.
BTC price at liquidation: $57,143 / 1 BTC = $57,143.
Buffer: $65,000 − $57,143 = $7,857 = 12.1% price drop before liq.
BTC drops 12% in roughly 1 in 20 trading weeks historically.
CeFi vs DeFi crypto loans
CeFi (Ledn, Nexo, Unchained, Coinbase): KYC required, fixed rates, usually no liquidation notice — they just liquidate and notify after. Pros: no smart-contract risk, predictable terms. Cons: platform insolvency risk (Celsius, BlockFi, Genesis all went bankrupt with user collateral).
DeFi (Aave, Compound, Morpho): permissionless, variable rates, transparent liquidation via smart contracts. Pros: no platform counterparty; can self-monitor on-chain. Cons: smart-contract exploit risk; liquidations automated the instant threshold hits with no human discretion.
Using a crypto loan for tax efficiency
The primary reason experienced holders take crypto loans is tax deferral. Selling 1 BTC bought at $10,000 for $65,000 triggers a $55,000 long-term capital gain — roughly $8,250-$11,000 in federal tax at 15-20% LTCG rate. Borrowing $40,000 against the same BTC generates zero taxable event. You pay $4,000-$5,000/year in loan interest instead of $8,000-$11,000 upfront in taxes.
This only makes sense if you believe BTC will continue appreciating. If BTC drops 50%, you've paid $4,000/year in interest AND your collateral is worth half. The strategy works best with a clear plan for repayment: a specific future event (next bull market peak, income event) that lets you repay the loan without forced selling at a low price.
Multi-collateral loans and portfolio-level LTV
Some platforms (Aave, Compound) allow multiple assets as collateral simultaneously. You can post 0.5 BTC + 5 ETH + $10,000 USDC to secure a single loan. Each asset has a different 'collateral factor' — BTC at 70-80%, ETH at 65-80%, stablecoins at 80-90%. The portfolio-level LTV calculation aggregates weighted collateral value across all assets.
Diversified collateral pools reduce liquidation risk compared to single-asset collateral. If BTC drops 20% but ETH only drops 10%, the portfolio LTV increases less than it would with 100% BTC collateral. Protocols like Morpho Blue allow custom collateral/debt pairs with isolated risk — a $50,000 USDC loan against wstETH runs in a separate risk module from other positions, preventing one liquidation from cascading to others.
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Crypto loans — frequently asked questions
What's a safe LTV ratio to borrow against BTC?
Conservative: <40% LTV — can survive a 50%+ drawdown before liq. Moderate: 40-55% LTV — survives 20-30% drawdown. Aggressive: 55-70% LTV — one volatile week from liquidation. For long-term loans (6+ months), stay under 40% to survive normal volatility. For short-term (weeks) with active monitoring, higher LTV is survivable.
Are crypto loans taxable?
Borrowing is not a taxable event in the US — you're receiving debt, not income. Interest paid may be deductible if used for investment purposes (consult a CPA). When you eventually repay, no tax. If you're liquidated, the liquidation is a taxable sale of your collateral — realize gain/loss at liquidation price.
What happens if my collateral drops overnight?
Most lenders send a margin call first, giving you 24-72 hours to add collateral or repay. DeFi protocols (Aave, Morpho) don't do margin calls — the liquidation just executes the instant threshold is breached. Set phone alerts at 80% of the distance to liq; don't rely on the lender to warn you in time.
Can I deduct interest paid on crypto loans?
If you used the loan for investment purposes (e.g., borrowed against BTC to buy more BTC), interest may qualify as investment interest expense — deductible up to investment income on Schedule A. If used for personal spending (vacation, car), it's personal interest — not deductible. Consult a CPA for your specific situation.
Why do Bitcoin-backed loans have lower rates than personal loans?
Over-collateralization. You post $1.60 of BTC to borrow $1 — the lender's risk is minimal (they'll liquidate before going underwater). Typical rates: 6-12% APR on crypto-backed loans vs 15-30% APR on unsecured personal loans. Collateral quality matters: BTC-backed loans < ETH-backed < altcoin-backed in rate.
What happened to Celsius, BlockFi, and Genesis borrowers during bankruptcy?
Celsius filed bankruptcy in July 2022 with $1.2B deficit. Borrowers who had collateral held by Celsius had it frozen during bankruptcy proceedings. Some collateral was used to repay institutional creditors before retail holders. BlockFi filed in November 2022 following FTX contagion — similar outcome. The lesson: CeFi platforms that commingle customer collateral with their own trading operations carry platform insolvency risk. Unchained's collaborative custody and Aave's on-chain escrow solve this.
Can I borrow against altcoins, or only BTC and ETH?
Aave accepts 20+ assets as collateral including LINK, UNI, WBTC, stETH, USDC, and others — each with different collateral factors (50-85%). CeFi platforms are more restrictive: Ledn and Unchained accept only BTC; Nexo accepts BTC, ETH, and some large-cap alts. Altcoin-backed loans on CeFi typically come with higher rates (12-18% APR) and lower LTV limits (40-50%) due to higher volatility.
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