Strike, the Bitcoin Lightning-based payment application, is launching a new Bitcoin-backed lending program. This initiative offers users a way to access liquidity without having to sell their assets.
What is Bitcoin-Backed Lending?
Bitcoin-backed lending is a financial service that allows Bitcoin holders to borrow traditional currencies while using their Bitcoin as collateral. This enables liquidity access without triggering taxes that may arise from selling assets.
Details of the Strike Lending Program
The Strike program targets significant borrowers, with loan amounts ranging from $75,000 to $2 million. It features a fixed term of 12 months and a minimum APR of 12%. The loans require Bitcoin as collateral and are currently available in select U.S. regions.
Potential Benefits and Risks
Using Bitcoin as collateral allows users to secure funds without liquidating their assets, maintaining market exposure. However, the use of a volatile asset carries risks such as margin calls and interest charges, requiring borrowers to monitor Bitcoin prices closely.
Strike's Bitcoin-backed lending program provides new opportunities for high-net-worth individuals and businesses, necessitating careful analysis of risks and outcomes.
