Bitcoin-backed loans sound tempting: Generate liquidity without selling your Bitcoin. But there is that one word that keeps everyone awake at night:
Liquidation. When the Bitcoin price crashes and your LTV (Loan-to-Value) gets too high, the platform force-sells your Bitcoin. Total loss possible.
The Hybrid Strategy is an answer to this problem: It combines loans with automatic partial selling – before the platform does it for you.
What is the Hybrid Strategy?
The idea is simple: Use Bitcoin loans as long as things go well – but have an emergency plan.
In practice:
• Normal case: You take out loans against your Bitcoin (like in the pure refinancing strategy)
• Crisis case: When the LTV reaches a critical level, you sell part of your Bitcoin yourself
• Result: You reduce the loan, lower the LTV, and avoid forced liquidation
You deliberately give up some Bitcoin to protect the rest. A controlled retreat instead of total loss.
How Does the LTV Trigger Work?
The LTV (Loan-to-Value) shows the ratio between loan and collateral:
LTV = Loan Amount ÷ Bitcoin Value × 100
Example: $20,000 loan with $50,000 Bitcoin value = 40% LTV
What happens when the price drops?
• Bitcoin falls to $30,000 → LTV rises to 67%
• Bitcoin falls to $25,000 → LTV rises to 80%
• On most platforms: Liquidation at 80-90% LTV
The trigger in our calculator: You set an LTV threshold (e.g., 70%). As soon as this is reached, the calculator simulates a partial sale to bring the LTV back to a safe level.
💡 Recommendation: Set the trigger at least 10% below your platform’s liquidation LTV. With 80% liquidation, that means 70% trigger max – better yet 65%.
Advantages Over Pure Loans
Liquidation protection: You stay in control. No waking up to “Your Bitcoin has been sold.”
Sleep better: You don’t have to panic-check the app every time the price dips.
Flexibility: In good times, you benefit from the loan model. In bad times, you have a fallback.
The price: You will have to sell Bitcoin during crash phases. That’s the trade-off for more security.
Risks & Limitations
The Hybrid Strategy is better than pure loans – but not a free pass:
Selling in a crash: You sell exactly when Bitcoin is cheapest. That’s emotionally and financially painful.
Flash crashes: During extremely fast drops (e.g., -30% in hours), the trigger might kick in too late.
Tax complexity: Every sale is potentially taxable. This makes bookkeeping more complicated.
Less Bitcoin at the end: Compared to “just hodling,” you’ll have fewer BTC – but also less total-loss risk.
⚠️ Important: The simulation assumes instant execution. In reality, you need a plan: How fast can you sell? How do you transfer money to the platform? Test this beforehand!
Calculate It Yourself
Play through different scenarios: What happens with a 60% vs. 70% trigger? How often is the emergency sale triggered? How much Bitcoin remains at the end?
👉 Go to Hybrid Strategy Calculator
Disclaimer: This is not financial advice. Bitcoin-backed loans are high-risk. The simulation shows possible outcomes, not guarantees. Only use what you can afford to lose completely.