pledgeSafer range
25-40% LTV leaves more downside buffer.
Understanding LTV Ratios and Liquidation
6 min read
Quick decision
LTV decides how much room BTC has to fall.
Higher LTV gives you more cash today and less time to react when BTC drops. Lower LTV costs borrowing power but buys breathing room.
Tighter range
50%+ LTV can get pressured fast.
Watch first
Margin call price, then liquidation price.
What LTV actually means
LTV = (Loan Value ÷ Collateral Value) × 100
If your collateral is worth $100,000 and you borrowed $50,000, your LTV is 50%.
Platforms set a maximum LTV at origination — typically 50% for BTC. That means you can borrow $50 for every $100 of BTC you deposit. Some platforms now advertise much higher short-term tiers (YouHodler goes loan-form LTV on its 30-day daily-fee product), but these come with dramatically higher liquidation risk and almost no room for BTC volatility.
A real example: BTC at $100,000
Scenario: 1 BTC deposited at $100,000
LTV
40%
Borrowed
$40,000
Margin call
$142,857/BTC
Liquidate
$166,667/BTC
LTV
50%
Borrowed
$50,000
Margin call
$133,333/BTC
Liquidate
$142,857/BTC
LTV
70%
Borrowed
$70,000
Margin call
$116,667/BTC
Liquidate
$125,000/BTC
LTV
85%
Borrowed
$85,000
Margin call
$111,111/BTC
Liquidate
$117,647/BTC
Notice how the 85% LTV loan gets margin called at $111,111/BTC — only 11% above your entry price. A single bad day in crypto markets can trigger this.
Margin call vs. liquidation
!
Margin Call
A warning. Your LTV has exceeded the threshold. You have a window — sometimes 24-72 hours — to add more collateral or pay down the loan. Platforms may email or text you. Or they may not.
⚠ You can still fix this yourself.
✕
Liquidation
The platform has sold your Bitcoin. This is irreversible. You receive whatever proceeds remain after paying off your loan. If BTC dropped significantly, you may receive almost nothing back.
✕ Your collateral is gone.
Grace periods: read the fine print
Not all margin calls come with warning. Not all have grace periods. Here's what we found across platforms:
Unchained
24 hours
Best-in-class grace period. They actually contact you.
Figure
Confirm agreement
Public pages describe liquidation protection but do not publish a fixed grace-window table in the pages reviewed.
Ledn
Not publicly specified
Terms do not clearly state a grace window.
YouHodler
Minimal or none
High LTV products mean rapid liquidation risk.
How to avoid liquidation
1
Borrow at 40% LTV, not 50%
The extra buffer matters more than you think. A 40% LTV on $100K BTC = margin call at $166K. A 50% LTV = margin call at $133K. That is a 33% larger safety margin.
2
Set price alerts
Platform alerts are often delayed. Set your own BTC price alerts at 10% intervals. If BTC drops 15%, act — do not wait for an email.
3
Choose platforms with higher margin call thresholds
A platform that margin calls you at 70% LTV (like Unchained) gives you more warning than one that margin calls at 80%.
4
Have cash ready
If you are borrowing long-term, keep enough cash to make at least one margin call payment without selling anything.
5
Consider overcollateralizing
Deposit more BTC than the minimum required. Some platforms allow you to add collateral at any time without renegotiating terms.
Read these next before you borrow
These are the guides most likely to change the decision after you understand liquidation mechanics: the borrowing basics, the sell-versus-borrow tradeoff, custody structure, and platform selection.
Start hereLoan BasicsReset the full borrowing workflow before you compare rates, terms, and collateral requirements.Decision frameBorrow vs SellUse this when the real question is whether a loan still makes sense once taxes, risk, and time horizon are on the table.Structure riskCustody ModelsRead this if liquidation risk is only one part of the concern and you also need to pressure-test key control and recovery design.Shortlist nextChoosing a PlatformMove here when you are ready to compare real lender tradeoffs after you understand the liquidation mechanics.
Research boundary
This guide is informational, not a substitute for current lender terms. Liquidation thresholds, grace periods, and collateral-management rules can change, so verify current terms directly with the platform before you borrow.
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