What Is Loan-to-Value (LTV)?
Loan-to-Value (LTV) is the ratio of your outstanding loan balance to the current market value of your Bitcoin collateral. It's expressed as a percentage:
LTV Formula
LTV = (Loan Balance ÷ Collateral Value) × 100%. For example, if you borrow $10,000 against $25,000 worth of BTC, your LTV is 40%.
Your LTV changes in real time as Bitcoin's price moves. If BTC goes up, your LTV decreases (safer). If BTC goes down, your LTV increases (riskier). Bitlendex monitors your LTV 24/7 and will notify you if it approaches critical thresholds.
LTV Zones
Bitlendex uses a color-coded zone system to help you understand your risk level at a glance:
- Green Zone (0–50% LTV) — Healthy. You have a comfortable buffer and no action is needed. This is where we recommend keeping your loan.
- Yellow Zone (50–65% LTV) — Caution. Your safety margin is narrowing. Consider adding collateral or making a partial repayment.
- Orange Zone (65–75% LTV) — Margin Call. You will receive notifications urging you to reduce your LTV. Add collateral or repay a portion of your loan.
- Red Zone (75–83.33% LTV) — Danger. You are approaching the liquidation threshold. Immediate action is required to avoid automatic liquidation.
Liquidation threshold: 83.33% LTV
If your LTV reaches 83.33%, Bitlendex will begin automatically selling a portion of your collateral to bring your LTV back below safe levels. This is irreversible — act before reaching this point.
How Margin Calls Work
A margin call is a notification that your LTV has entered a risky zone. Bitlendex sends margin call alerts via email and dashboard notifications when your LTV exceeds 65%.
When you receive a margin call, you have two options to reduce your LTV:
- Add more collateral — Deposit additional Bitcoin to increase your collateral value and lower your LTV ratio.
- Make a partial repayment — Pay back a portion of your loan balance to reduce the numerator in the LTV calculation.
Both actions immediately improve your LTV. You can do one or both — the goal is to bring your LTV back below 65% and into the green zone.
Set up price alerts
Use your dashboard to set custom BTC price alerts. Getting notified early gives you more time to act before a margin call is triggered.
How Liquidation Works
Liquidation is the automatic sale of a portion of your Bitcoin collateral to repay part of your loan. It is triggered when your LTV reaches 83.33%.
Here's what happens during a liquidation event:
- Your LTV reaches 83.33% due to a decline in Bitcoin's price.
- Bitlendex automatically sells the minimum amount of BTC needed to bring your LTV back to approximately 50%.
- The proceeds from the sale are applied to your outstanding loan balance.
- Your remaining collateral stays in your account and your loan continues with a lower balance.
- You receive a notification with details of the liquidation event.
Liquidation is automatic and irreversible. The platform sells only enough collateral to restore a safe LTV — it does not liquidate your entire position. However, the sold BTC cannot be recovered.
Strategies to Avoid Liquidation
The best way to avoid liquidation is to maintain a healthy LTV with sufficient buffer. Here are practical strategies:
- Borrow conservatively — Start with a 30–40% LTV instead of the maximum. This gives you significant room for BTC price declines.
- Monitor your LTV daily — Check your dashboard regularly, especially during volatile markets.
- Set price alerts — Configure notifications for BTC price levels that would push your LTV above 50% or 65%.
- Keep reserves ready — Have additional BTC or stablecoins available to deposit as extra collateral if needed.
- Repay proactively — If you see your LTV climbing, make a partial repayment before a margin call is triggered.
The 40% rule
A common strategy is to never borrow more than 40% of your collateral value. At 40% LTV, Bitcoin would need to drop roughly 53% before liquidation is triggered — a meaningful safety buffer even in volatile markets.
Frequently Asked Questions
Your remaining Bitcoin stays in your account. Liquidation only sells enough BTC to bring your LTV back to approximately 50%. Your loan continues at a reduced balance.
No. Automatic liquidation is a risk management mechanism that protects both borrowers and the platform. However, you can prevent liquidation by maintaining a healthy LTV.
Only the minimum amount necessary to restore your LTV to approximately 50%. For example, if your LTV is at 83.33% and your loan is $10,000, the platform would sell enough BTC to bring the ratio back to a safe level.
Yes. Bitlendex sends margin call alerts at 65% LTV and escalating warnings as your LTV approaches 83.33%. However, in rapid market crashes, the time between notifications and liquidation may be very short.
No. Liquidation is partial — it reduces your loan balance and collateral proportionally. Your account remains active and you can continue managing the remaining position.
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