Strike Debuts Volatility-Proof Bitcoin Loans to Curb Forced Liquidations

Founder Jack Mallers frames the offering as a volatility-proof solution, emphasizing that a borrower’s collateral remains untouched regardless of how far the price of Bitcoin falls. Unlike traditional crypto lending models that force users to add capital during market slumps, this structure shifts the risk profile. Borrowers retain their assets through market turbulence, but the safety net comes at a premium. The new loans carry an annual percentage rate reaching 14.2%, roughly 3 percentage points higher than Strike’s standard lending products.

This protection is not absolute, as the firm distinguishes between price risk and payment risk. Should a borrower miss an interest or maturity payment, a 10-day grace period is triggered. Failure to settle the balance within that window empowers Strike to sell a portion of the collateral. To manage the inherent risks of this model, the company limits the initial loan-to-value ratio to 45% and restricts the product to six-month terms. Mallers noted that the elevated interest rates are essential to funding the hedging strategies required to backstop these loans against market swings.