How to Borrow Against Bitcoin in 2025

Many investors are using Bitcoin-backed loans as a way to access funds while retaining their holdings. Whether you need cash for an investment, expenses, or simply want to avoid triggering a taxable event, Bitcoin loans offer a flexible alternative to traditional credit systems. This guide will walk you through everything you need to know to get started.

Why Borrow Against Your Bitcoin?

Asset Retention

By borrowing against your Bitcoin, you gain liquidity without selling, allowing you to benefit from potential future price appreciation. However, price drops may require additional collateral deposits.

Speed

Bitcoin-backed loans offer rapid processing, often with instant approvals and funding within 24 hours. This is far faster than traditional loans that can take weeks.

No Credit Checks

These loans don’t require credit checks, making them accessible to those with low credit scores or limited credit history. Instead, approval is based on your Bitcoin collateral.

Competitive Rates

Because crypto collateral lowers lender risk, Bitcoin loans often have lower interest rates than unsecured loans like credit cards or payday loans, leading to potential cost savings.

Global Access

Available worldwide, Bitcoin loans bypass regional banking restrictions. With just an internet connection, borrowers in underbanked areas can access funding.

Privacy

Unlike traditional loans that demand extensive personal and financial details, Bitcoin loans focus on collateral, requiring minimal personal information - ideal for those who value discretion.

Related Content: Security Measures for Bitcoin Loans

Tax efficient

Using Bitcoin as collateral typically doesn’t trigger capital gains taxes. In some jurisdictions, interest payments may also be tax-deductible, but consult a tax professional before borrowing for tax benefits.

Read more: How to Borrow Against Crypto - Decoding Crypto Loans 

5 Things You Should Know Before Applying For a Bitcoin Loan

There are a few key terms to understand before you take out a Bitcoin loan.

Annual Percentage Rate (APR)

The APR reflects your loan’s total cost, including interest and fees. A lower interest rate doesn’t always mean a cheaper loan. Check the APR to compare options accurately. Most providers require monthly interest payments.

Loan Duration

Shorter loan terms often have lower interest rates but require higher monthly payments. Longer terms reduce monthly costs but may come with higher overall interest.

Collateral

Your Bitcoin collateral determines loan terms. Offering more can secure better rates. However, consider market volatility and the risk of additional collateral requirements.

Read more: Crypto Loan Without Collateral - The Complete Guide

Fees

Lending platforms charge various fees, including origination, transaction, and early repayment penalties. Compare fee structures to find the most cost-effective option.

Loan-to-Value (LTV) Ratio

LTV measures your loan amount against your collateral’s value. Higher LTVs lead to higher interest rates, while lower LTVs offer better terms but require more Bitcoin as collateral.

How To Borrow Against Your Bitcoin Step-By-Step With Ledn

1. Assess your financial circumstances

Before applying for a Bitcoin loan, evaluate your financial situation, including your income, expenses, and existing debts, to ensure you can comfortably manage a new loan. Consider  the risks and benefits associated with the volatility of Bitcoin, especially how market fluctuations might impact the loan's terms. It’s always a good idea to think about the purpose of the loan, set a realistic borrowing limit based on your financial capacity, and plan for repayments.

2. Create or Log Into Your Ledn Account

If you don't already have a Ledn account, you'll need to create one. Visit the Ledn website and sign up by providing the required personal information and going through the verification process.

If you already have an account, log in using your credentials.

3. Go to the Loan Section

Once logged in, go to the section related to loans. Ledn offers several types of loans, so you will need to choose the one that best suits your needs.

4. Select the Type of Loan

Decide whether you want a Bitcoin-backed loan or another type of loan that Ledn offers. 

5. Enter Loan Details

When applying for a Bitcoin loan, you’ll need to specify the amount you want to borrow and the Bitcoin collateral you’re willing to provide. You must also choose a collateral management type. A Standard Bitcoin-backed loan allows Ledn to rehypothecate the Bitcoin collateral, which helps lower interest rates. Alternatively, a Custodied Bitcoin-backed loan ensures the collateral is held by institutional custodians and banks, meaning it cannot be rehypothecated to generate interest.

6. Review Loan-to-Value Ratio (LTV)

Ledn will provide information on the loan-to-value ratio for your loan. This ratio indicates the outstanding amount of the loan in relation to the value of your Bitcoin collateral. Ensure that you are comfortable with this ratio and understand its implications. 

The starting LTV for all Ledn loans is  50%.

7. Submit Loan Application

After entering all the necessary details and reviewing the terms, submit your loan application. 

8. Wait for Approval

Once submitted, your application will go through a review process. Ledn will typically respond with a loan approval within a day, ask for additional information, or provide details on the next steps.

9. Review and Accept Loan Terms

If your loan application is approved, Ledn will provide you with the loan terms. Read through these terms, including interest rates, repayment schedule, and any fees or penalties.

10. Deposit Collateral

If you agree to the terms, you'll need to deposit the Bitcoin collateral. Follow the instructions provided by Ledn to transfer your Bitcoin to the designated wallet.

11. Receive Funds

Once your collateral is received and verified, Ledn will disburse the loan amount to you, usually within 24 hours of applying. This could be in the form of fiat currency or stablecoins, depending on the type of disbursement you chose.

12. Repay Loan

Once you receive your Bitcoin loan, you need to adhere to the repayment terms, including the schedule, interest rates, and any fees. We suggest regularly monitoring your loan balance and the loan-to-value (LTV) ratio. Ensure timely repayments to avoid penalties.

Is a Bitcoin Loan Right For You?

This type of loan is a useful way to access funds using your Bitcoin as collateral, but it's not a one-size-fits-all solution. 

It may be a good option if you need quick access to funds while retaining your Bitcoin, especially for covering expenses or seizing investment opportunities. Since these loans don’t require credit checks, they can be ideal for those with limited credit history or lower credit scores. However, you must be comfortable with market volatility. If Bitcoin’s value drops, you may need to provide additional collateral to maintain your loan-to-value (LTV) ratio.

Before applying, assess whether the loan fits your financial situation. Ensure you can manage repayments and interest costs without strain. If you have a long-term investment strategy, a Bitcoin loan allows you to unlock liquidity while maintaining exposure to potential future appreciation.

Alternatives to Borrowing Against Your Bitcoin

While Bitcoin loans aren’t the only way to access liquidity without selling your holdings. Depending on your financial goals, risk tolerance, and liquidity needs, other strategies may be more suitable.

Selling 

If immediate liquidity is your priority and you don’t want to worry about loan interest or collateral management, selling a portion of your Bitcoin holdings may be a simpler approach. However, this comes with potential capital gains taxes and forfeits future appreciation if Bitcoin’s price increases.

Using Stablecoins for Yield

Rather than borrowing, you could convert a portion of your Bitcoin into stablecoins and stake them on platforms offering yield-earning opportunities. This allows you to generate passive income without taking on loan obligations.

Traditional Loans and Credit Options

For those with strong credit scores, traditional personal loans or home equity lines of credit (HELOCs) may offer competitive interest rates without the risk of Bitcoin price fluctuations affecting loan terms.  

Peer-to-Peer Lending

Instead of using a centralized lender, you could explore peer-to-peer (P2P) lending platforms where you can negotiate loan terms directly with a lender. This can sometimes lead to more flexible repayment structures.

Why Use Ledn To Borrow Against Your Bitcoin?

• Ledn has never paused client withdrawals and offers Proof of Reserves.
• There are no hidden fees, making financial planning straightforward and predictable.
• Leading investors such as White Star, 10T Holdings, Kingsway, and Coinbase have backed Ledn.
• By focusing only on the most reputable assets like BTC, USDC, USDT, and ETH, Ledn provides a more focused and potentially less volatile selection for users.
• Ledn uses top-tier measures like AES-256 encryption, mandatory 2FA, and partners with BitGo for asset storage.
• You can check how your assets are being used through monthly Open Book Reports.
• With KV
• You can combine a Bitcoin-backed loan with the purchase of an equivalent amount of Bitcoin.

Ready to get started Borrowing Against Your Bitcoin?

Bitcoin loans offer quick approvals, no credit checks, competitive interest rates, global access, privacy, and asset retention.  

Interested? You can apply here.

Sponsored by 21 Technologies Inc. and its affiliates (“Ledn”). All reviews and opinions expressed are based on my personal views.