Loan-to-Value (LTV)

What is Loan-to-Value (LTV)?

Loan-to-Value (LTV) is the ratio of a loan’s amount to the market value of the collateral that secures it, expressed as a percentage. It’s the single most important metric in any collateralized loan — it determines how much you can borrow, how much buffer you have against price declines, and at what point the lender will issue a margin call or partially liquidate your collateral.

LTV = Loan Amount ÷ Collateral Value × 100

For example, if you deposit $100,000 in Bitcoin and borrow $50,000 against it, your LTV is 50%.

How LTV Works for Crypto-Backed Loans

Crypto-backed loans are over-collateralized — the loan amount is always less than the value of the collateral. This protects the lender if the collateral price drops, and it determines the borrower’s risk profile:

  • Lower LTV = safer position. More collateral cushion before a margin call. Often qualifies for better rates.
  • Higher LTV = more borrowing power, less cushion. Smaller collateral price drops can trigger margin calls or liquidation.

Because crypto prices are volatile, LTV is a moving target. As your collateral’s market value rises, your LTV decreases automatically (you’ve effectively borrowed less relative to what you hold). As collateral value falls, your LTV rises and you move closer to the margin call threshold.

Margin Call & Liquidation Thresholds

Most crypto lenders define three LTV thresholds:

  1. Maximum starting LTV — the highest LTV allowed when the loan is opened.
  2. Margin call threshold — when LTV rises above this level, the lender notifies you and gives you a window (Arch uses 24 hours) to add collateral or partially repay before any liquidation.
  3. Liquidation threshold — the LTV at which the lender begins selling collateral to bring the LTV back down. Arch uses partial liquidation — only enough collateral is sold to restore a healthy LTV, never the full position.

A lower starting LTV gives more headroom against all three thresholds. Conservative borrowers often start well below the maximum.

Arch Lending’s LTV Limits by Asset

Different collateral types carry different volatility profiles, so LTV limits vary:

  • Bitcoin (BTC): Up to 60% LTV
  • Ethereum (ETH): Up to 55% LTV
  • Solana (SOL): Up to 45% LTV
  • XRP: Up to 45% LTV

Margin call and liquidation thresholds also vary per asset — see the per-coin pages (Bitcoin, Ethereum, Solana) for the exact thresholds.

LTV vs. Interest Rate

LTV and APR are independent levers:

  • APR is determined primarily by loan size at Arch (larger loans get better rates).
  • LTV is determined by collateral type and how much you choose to borrow against it.

Adding more collateral lowers your LTV (safer) but does not change your APR tier. Borrowing more relative to collateral raises your LTV (riskier) but also doesn’t change your APR.

Why LTV Matters

LTV is the single biggest knob you control after choosing a lender. A borrower at 30% LTV can withstand a 50%+ drop in collateral price before facing a margin call. A borrower at 60% LTV faces margin call risk on a 15%–20% drop. Choose LTV based on your tolerance for volatility and your ability to top up collateral if needed.

For a deeper walkthrough of LTV mechanics and how Arch’s protections work, see LTV & liquidation.