Why borrow instead of sell?
Selling BTC for cash generally triggers capital gains. Borrowing against it — pledging BTC as collateral for a dollar (or USDC) loan — generally does not, because a pledge is not a sale. That makes collateralized borrowing the go-to tool for short-term liquidity: a tax bill, a bridge to a house purchase, a business expense — without resetting your cost basis.
Comparison: Coinbase vs Ledn vs Unchained
| Product | What it is | Good to know |
|---|---|---|
| Coinbase (Morpho onchain USDC loans) | Eligible Coinbase users borrow USDC against BTC via Morpho onchain markets, without leaving the app flow. | Onchain rails mean transparent, smart-contract mechanics; availability is limited by region and eligibility. Borrowing limits and costs are set by the market and the app — check current terms. |
| Ledn | Dedicated Bitcoin-backed lender offering dollar loans collateralized by BTC. | Straightforward custodial model aimed at holders who want liquidity without selling; loan sizing is conservative by design. Confirm custody, regions, and current terms. |
| Unchained | Multisig, collaborative-custody lending: keys shared between you and Unchained. | Appeals to self-custody-minded borrowers — no single party holds all keys. Process can be more hands-on than a one-click app loan. Verify current offering. |
LTV and liquidation, explained qualitatively
- LTV (loan-to-value) — your loan as a share of pledged BTC value. Borrow a little against a lot of BTC (low LTV) and you have a wide buffer; borrow close to the max (high LTV) and even a modest dip triggers a margin call.
- Margin call — the lender asks you to add collateral or repay part of the loan as BTC price falls.
- Liquidation — if you don't top up in time, the lender sells some or all of your collateral. That sale is generally a taxable disposal — the worst of both worlds: fewer sats and a tax bill.
- Rule of thumb: borrow well below the maximum, keep dry powder (cash or extra BTC) ready to top up, and size the loan so you can survive a harsh drawdown, not just an average one.
Risks checklist
- Could I repay this loan from income alone if BTC fell hard and stayed down?
- Do I understand exactly what price move triggers a margin call on my loan?
- Do I have top-up funds ready — not locked in the same collateral?
- Who holds my keys during the loan, and what happens if the lender has issues?
- Have I modeled the tax outcome of a forced liquidation, not just the happy path?
- Is the loan term flexible enough for my actual need (weeks vs years)?
- Have I compared borrowing costs against just selling a smaller amount outright?
FAQ
Is borrowing against Bitcoin taxable?
Generally no at borrow time — a collateralized loan is not a sale. But liquidated collateral generally is a disposal. Confirm with a tax professional.
Which is best: Coinbase, Ledn, or Unchained?
Depends on what you value: in-app convenience (Coinbase/Morpho), a dedicated BTC lender (Ledn), or collaborative custody (Unchained). Compare custody, availability, and current terms — then pick (as of Sept 2026 — verify).
Can I use a BTC loan for a house down payment?
Sometimes — borrowed funds can bridge a purchase without selling BTC. But mortgage lenders have fund-sourcing rules, so confirm your mortgage lender accepts borrowed funds and get it in writing. See also our crypto mortgages guide.