Strike introduces volatility-protected Bitcoin loans

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Strike introduces Bitcoin loans

Why the market needs a new product

The Bitcoin industry has been trying for years to develop financial products that expand Bitcoin’s use beyond savings and long-term holding. However, the market for crypto-backed loans remains limited.

According to a June report by crypto lending platform Ledn, 88% of surveyed crypto investors are willing to consider a loan backed by digital assets, but only 14% actually use such products. Among the main reasons are a lack of trust in crypto lending and high market volatility.

Mallers noted that volatility has been one of the main barriers to the development of this segment. In 10 of the past 12 years, Bitcoin has fallen by 30% or more, and since 2014 it has seen drawdowns of 50% or more four times.

Bitcoin-backed loans are also offered by Binance, Coinbase, Nexo and Xapo Bank.

What the loan rate will be

The maximum initial loan-to-value ratio for Strike’s new product is 45%. This means that a customer who provides $100,000 in Bitcoin as collateral can borrow up to $45,000.

The annual percentage rate on the new product is 2.95 percentage points higher than on Strike’s standard Bitcoin loans. Standard loans carry an APR of 7.75% to 11.25%. As a result, volatility-protected loans may carry a rate of roughly 10.7% to 14.2%.

According to Mallers, the additional fee is used to hedge market risks.

“The secret sauce is that we’re taking the extra charge that we’re giving you guys and we’re putting it on extra hedges in the market to protect all of us,” he said.

Mallers added that for clients who are willing to accept a shorter term and a higher cost of borrowing, Bitcoin’s price movement will no longer become a reason for liquidation.

Over the past year, Bitcoin has fallen 54% — from an all-time high of $126,080 in October to $58,190 on June 25.

Why Jack Mallers is promoting Bitcoin

For Jack Mallers, such products are not just an attempt to capture a niche in the crypto lending market. He has long been one of the most visible Bitcoin evangelists and has consistently promoted the idea that Bitcoin should be not only an asset for long-term holding, but also a full-fledged financial infrastructure. Strike was built around this logic from the start: to make Bitcoin convenient for payments, transfers, savings and now lending.

The new product fits well into this strategy. Mallers is trying to show that Bitcoin can be used in everyday financial scenarios without selling the asset itself and without leaving the Bitcoin ecosystem. For him, a Bitcoin-backed loan is another step toward a world where Bitcoin works not only as “digital gold,” but also as the foundation for broader financial services.

As a reminder, Strike previously received a BitLicense and expanded its services in New York.

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