Bitcoin · power law · borrowing against BTC
Borrow against Bitcoin and a falling price can liquidate you. But the power law says BTC has a floor it rarely breaks. So the real question is simple: is your liquidation price above or below that floor over the life of the loan? Below it, you're safe unless the model breaks. Above it, a normal bear market is enough.
01 / YOUR LOAN
02 / THE RISK
Tip: drag the white spot line on the chart to model any entry price.
03 / HOW TO READ IT
If your red liquidation line stays under the orange floor for the whole term, then to be liquidated Bitcoin would have to fall below its historical support line, something it has done only briefly, three times in fifteen years (2015, 2016, and the March 2020 crash). By the model's logic, that's a strong position: a routine 70–80% cycle drawdown that merely visits the floor wouldn't reach you.
If the red line sits above the orange floor, a perfectly ordinary cycle bottom (the kind that happens every few years and bounces off the floor) would liquidate you. Here the power law offers no comfort: you'd be wiped out inside the corridor the model considers normal. Lower your LTV (borrow less against the same BTC) to push the liquidation price back below the floor.
The floor rises faster than a typical loan's interest, so your safety margin usually widens as the loan ages. Risk is concentrated early. A position that's exposed today can become model-safe later as the rising floor pulls away from your liquidation price, provided your interest rate doesn't outrun the floor's growth.
Important. Real lenders liquidate on their own oracle/index price and can trigger on brief wicks below your level. Terms, margin-call rules and fees vary. The floor itself can break (it has, briefly). This tool illustrates the power law's logic for your inputs. It is not a guarantee, a recommendation, or financial advice. Borrowing against Bitcoin can lose you your coins.