Strike has launched a new bitcoin-backed loan that protects borrowers from one of the biggest risks in digital-asset-based lending: losing their bitcoin when prices fall sharply.

The new loan is called a volatility-proof or volatility-protected bitcoin loan. It lets people borrow money using bitcoin as collateral without worrying that a drop in bitcoin's price will automatically trigger a margin call or force the sale of their bitcoin.

However, this extra protection comes with higher interest rates, a shorter loan period, and the requirement to make every payment on time.

Strike CEO Jack Mallers said the company created the new loan after listening to customer feedback. Strike's first bitcoin loan product, launched in May 2025, led to many liquidations when bitcoin's price fell by about 54%.

"No margin calls. No price liquidations. No matter how far bitcoin falls, your bitcoin doesn't move," Mallers said. "Volatility is inevitable. Liquidation isn't. Borrow dollars. Keep the bitcoin."

Unlike most bitcoin-backed loans, Strike's new loan does not react to changes in bitcoin's price. As long as borrowers continue making their payments, their bitcoin stays locked as collateral and will not be sold because of market price swings.

Previously, borrowers could face an LTV warning at 65%, a margin call at 70%, and automatic partial liquidation at 85% as bitcoin prices fell. The new structure removes these risks completely.

The loan does have limits. Borrowers can borrow up to 45% of the value of their bitcoin. For example, someone using $100,000 worth of bitcoin as collateral can borrow up to $45,000. The loan also lasts only six months.

The cost of this protection is higher interest. Strike's regular bitcoin loans charge about 7.75% to 11.25% per year. The new loan adds about 2.95 percentage points, bringing the annual interest rate to roughly 10.7% to 14.2%.

Borrowers also have less flexibility. They cannot withdraw their collateral during the loan term or switch between a standard loan and a volatility-proof loan after the agreement begins.

Mallers said the extra money paid by borrowers helps Strike protect the loans from market risk.

"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 explained.

Even though the loan protects against price drops, borrowers can still lose some of their bitcoin if they stop making payments. Strike gives customers a 10-day grace period to catch up on missed payments or contact the company. If they do neither, Strike can sell part of their bitcoin to recover the money it is owed.

"That's why we call it 'volatility-proof,' not 'liquidation-proof,'" Mallers said.

The loans are available to individuals and businesses in most US states, although they are not currently offered in California, New York, or Texas. They can be used for new loans, refinancing existing loans, or combining several loans into one.

Strike launched the new product as bitcoin continues to experience large price swings.

The company hopes the new design will make more people feel comfortable borrowing against their bitcoin instead of selling it during market downturns.

A recent report from digital asset lending company Ledn found that 88% of investors would consider using a digital-asset-backed loan. However, only 14% actually use one.

According to the report, many people still worry about market volatility and do not fully trust bitcoin-backed lending products.

Some people in the digital asset industry believe Strike's new loan could help solve that problem.

Bitcoin investor Fred Krueger said the product "could eliminate one of Bitcoin's biggest structural problems: forced selling during market crashes." Instead of losing bitcoin because prices fall, borrowers would only face liquidation if they fail to repay the loan.

Others praised the idea but pointed out that it is expensive. Rob Topping, executive chairman of Vibes Capital Management, called it a "great product for those who need near-term liquidity and don't want to risk liquidation," while noting that an interest rate of up to 14% is high.