Bitcoin Β· power law Β· 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 once, for a few hours, in the March 2020 crash. By the model's logic, that's a strong position: a routine 70β80% 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.
Build "Loan Risk" β a tool that assesses the liquidation risk of a Bitcoin-collateral loan against the power-law floor. Core idea: liquidation happens when the collateral falls enough that debt Γ· value hits the liquidation LTV; the power law says BTC has a floor it rarely breaks; so the real question is whether your liquidation price stays BELOW the rising floor over the loan term (model-safe β needs a floor breach) or rises ABOVE it (a normal cycle bottom liquidates you). Output one self-contained page. ββ SHARED DESIGN SYSTEM ββ Dark editorial. Fraunces / Hanken Grotesk / JetBrains Mono. Tokens: --bg:#0f1115 --bg2:#1a1d24 --bg3:#14171d --border:#2a2e37 --border2:#23272f --text:#e6e8eb --muted:#9aa0ab --dim:#6b7280 --accent:#f7931a --blue:#5b9bff --red:#ff6b6b --green:#4ade80. Centered .wrap (~860px), faint radial-gradient bg, sticky nav (hamburger on mobile, hide on scroll-down). Header = mono orange kicker + Fraunces h1 with italic-orange <em> + muted lede. Sections with mono .sec-num + h2. Stat cards and "claim" cards (green/red variants). Honest voice; not advice. ββ MODEL / MATH (compute in USD; ΓFX for display) ββ Genesis 2009-01-03. floor(days)=10^-16.493 Γ days^5.688 Γ 0.398. Live BTC spot fetched server-side (cached ~60s); USD/AUD toggle (date math is currency-independent). From inputs: collateralValue = loan / initialLTV; btc = collateralValue / spotPrice. balance(t) = accrues ? loanΓ(1+APR/12)^(months) : loan (t = elapsed time). liquidationPrice(t) = balance(t) / (btc Γ liquidationLTV) β at t=0 this = spot Γ initialLTV/liqLTV. Compare liquidationPrice(t) to floor(today+t) across the term. ββ INPUTS (responsive grid) ββ Loan amount; Initial LTV %; Liquidation LTV %; Interest APR %; Term (years); Interest mode (Accrues to loan / Paid monthly); Currency (USD/AUD). Defaults: 50,000 / 40 / 85 / 12 / 3 / Accrues / USD. A summary line: "You pledge X BTC (worth $Y now) to borrow $L at Z% LTV β liquidated if LTV hits W%." A live spot badge. ββ OUTPUT ββ β’ Stat cards: a RISK RATING (Low/Moderate/Elevated/High) from the tightest floorΓ·liquidation ratio over the term (β₯1.3 Low, β₯1.1 Moderate, β₯1.0 Elevated, <1 High); liquidation price now + the % drop to reach it; the tightest floor-vs-liquidation gap; debt at term end β end liquidation vs end floor. β’ Chart (inline SVG, linear y, over the term): the power-law floor (orange), your liquidation price (red, rising if interest accrues), today's price (dashed white reference), and a light-red "danger zone" shaded wherever the liquidation line sits ABOVE the floor. Make the white "spot" line DRAGGABLE vertically (grip + "β drag Β· spot $X" label): dragging it models any entry price, and because liquidation price β spot, the red line rises/falls with it; the rating, cards and danger zone recompute live. Hold the y-axis fixed mid-drag so the line tracks the cursor; rescale on release. A "βΊ reset to live spot" appears once dragged. (Live auto-refresh updates the spot unless the user has dragged a custom one.) β’ A dynamic sentence: safe throughout / becomes safe on <date> / becomes dangerous on <date>. ββ HOW TO READ IT (claim cards) ββ β’ (green) Liquidation below the floor β model-safe: only a sub-floor event (rare; once, March 2020) liquidates you; a routine 70β80% drawdown that merely visits the floor wouldn't reach you. β’ (red) Liquidation above the floor β exposed: an ordinary cycle bottom liquidates you; lower the LTV to push the liquidation price below the floor. β’ "Time is on your side" β the floor rises faster than typical loan interest, so the margin usually widens as the loan ages; risk is concentrated early. A strong caveat: lenders liquidate on their own oracle/index price and can trigger on wicks; the floor can break; not advice; borrowing against BTC can lose your coins. Footer: the liquidation-price + floor formulas and links to the other pages; credit to Santostasi. ββ SEO ββ title "Bitcoin Loan Liquidation Risk vs the Power Law Floor"; meta description; canonical; OG(article)+Twitter; π favicon; JSON-LD WebApplication (FinanceApplication, free).