Liquidity without selling Bitcoin: how to get it with a crypto loan

Obtaining liquidity without selling Bitcoin means getting euros with a crypto loan, using your Bitcoin as collateral without actually parting with it. This is the question anyone who has accumulated Bitcoin for years and now needs money for a specific expense, but doesn't want to break up their holdings, is asking themselves. Selling seems like the obvious solution, but for those who are committed to the asset long-term, or simply want to avoid unnecessary tax implications, that "obvious solution" can end up being costly.

In this article, you'll find out how a crypto loan works as a real alternative to selling, what role collateral plays, why liquidation risk is the point you should never overlook, and for which profiles this option makes sense compared to others. You'll also see how selling your Bitcoin differs, in practice, from using it as collateral to borrow.

Why wouldn't someone want to sell their bitcoin?

Those who have accumulated Bitcoin over several market cycles usually have two compelling reasons not to sell, even when they urgently need euros. The first is simply a matter of conviction: if you believe the asset will continue to appreciate in the medium or long term, selling now means giving up that exposure precisely when it could matter most. The second reason is tax-related, and in Spain, it is often the most decisive factor in economic terms.

Selling Bitcoin at a profit generates a capital gain that is taxed under Personal Income Tax (IRPF), with rates ranging from 19% to 30% in 2026 depending on the amount. This means that a significant portion of your assets goes to the tax authorities the moment you decide to liquidate your position, and you also permanently lose the possibility of profiting from any future price increase on the sold portion. A crypto loan addresses both problems simultaneously: you hold the Bitcoin as collateral and don't execute any sale.

Regarding the tax treatment of this operation, there is a criterion of the Spanish tax administration that should be known precisely.

This DGT criterion does not replace personalized tax advice.

This doesn't mean a crypto loan is exempt from any future tax implications: if the collateral were to be liquidated, that liquidation could indeed trigger a taxable event, because in practice it's equivalent to a forced sale of that portion of your Bitcoin. That's why it's important to understand the entire mechanism before making a decision, and not just the part that sounds most appealing.

The Bogleheads principles: the philosophy behind the portfolio

The Bogleheads portfolio is not a specific product, but the practical application of a handful of principles that have proven their strength for decades.

1. Start as soon as possible and be consistent. Timing in the market matters more than hitting the perfect entry point; contributing regularly allows you to average out your purchase price instead of trying to guess when to buy cheap.
2. Diversify globally. Global funds such as those that replicate the MSCI World or the FTSE All-World provide exposure to thousands of companies spread across dozens of countries.
3. Keep costs low. The Bogleheads community's general guideline is to look for funds with a TER below 0,2%.
4. Don't do market timing. Consistently predicting market movements is virtually impossible, even for professionals.
5. Adjust the risk to your time horizon. More equities when you're young; more fixed income as you get closer to the time when you'll need that money.
6. Simplify. A portfolio of two or three well-chosen funds is usually sufficient; added complexity does not improve profitability, it only adds cost and more chances of error.

These six principles are especially relevant in Spain, where the average cost of actively managed funds has traditionally been higher than that of their indexed equivalents. Every extra percentage point of TER you pay is a point that stops working for you in the long run.

The three-fund portfolio: the portfolio of three funds

The three-fund portfolio is the most popular implementation of the Bogleheads philosophy, and its appeal lies in how little you need to build it: a global equity fund —based for example on the MSCI World or the FTSE All-World—, a global fixed income fund that provides stability, and optionally, a money market fund as a liquidity reserve.

The ratio between equities and fixed income depends on your risk profile and investment horizon. As a guideline: an aggressive profile with a horizon of more than 20 years could manage around 90% equities and 10% fixed income; a moderate profile with 10-15 years, between 70% and 80% equities; and a conservative profile with less than 10 years, a more balanced allocation, close to 50-50.

Why are three funds—or even two—enough? Because that combination already provides exposure to tens of thousands of assets worldwide, and adding a fourth or fifth fund almost never significantly improves diversification: what it usually does is complicate monitoring and rebalancing.

How does a crypto loan work as an alternative to selling?

A crypto loan works similarly to a secured loan, but the collateral isn't real estate or a bank guarantee: it's your own Bitcoin. You provide a certain amount of Bitcoin as collateral, the platform holds it in custody for the duration of the transaction, and in return, you receive liquidity in euros or stablecoin almost immediately. There's no credit check like with ASNEF or payslip review, because the real guarantee is the collateral itself, not your credit history.

The amount you can receive depends on the LTV (loan-to-value ratio, or the ratio between the amount borrowed and the value of the collateral) offered by the platform. An initial LTV of 50%, for example, means that for every €10.000 worth of Bitcoin deposited as collateral, you can receive up to €5.000 in liquidity. This margin between the value of your collateral and the amount you borrow is precisely what protects the transaction against normal price drops.

Once formalized, the crypto loan is repaid according to the agreed-upon terms: some platforms allow monthly payments, others allow repayment in full at the end, and many allow early repayment without penalty. While the loan is active, your Bitcoin remains yours: you haven't sold it, it's still subject to any market fluctuations, and you get it back in full as soon as you repay the loan.

If you want to see for yourself how much liquidity you could obtain without touching your Bitcoin, you can simulate your crypto loan and enter the amount of collateral you have available. The simulator shows you the resulting LTV, the estimated fee, and the warning thresholds, so you can make a decision based on concrete data, not just an estimate.

What is collateral and how does liquidation risk work?

The collateral is the portion of your Bitcoin that is locked as security for the duration of the crypto loan. It remains yours, but you cannot move, sell, or transfer it until you repay the debt or the platform partially releases it. This restriction is what allows the transaction to operate without a credit check: the lender always has tangible backing for the loan amount.

Liquidation risk is the element that should never be underestimated when discussing this alternative, and it's important to explain it clearly. If the price of Bitcoin falls significantly, the LTV of your transaction automatically increases because the value of the collateral decreases while the debt remains the same. When that LTV exceeds certain thresholds, the platform starts issuing warnings, and if the price continues to fall to the maximum threshold, it may liquidate some or all of your collateral to cover the loan.

This liquidation isn't a theoretical scenario or a loophole that won't be applied: it's the mechanism that makes crypto loans without creditworthiness assessments possible, and it can be triggered automatically when the agreed-upon thresholds are crossed. Besides losing some of the Bitcoin you wanted to keep, this forced liquidation can generate the taxable event that opening the loan was intended to prevent, so the initial tax savings can disappear if the collateral is liquidated.

There are ways to reduce this exposure while the loan is active: providing additional collateral to lower the loan-to-value ratio (LTV), prepaying part of the debt, or maintaining the loan within a conservative initial LTV to provide a buffer against market downturns. None of these measures eliminates the risk entirely, and any decision regarding how much collateral to provide must be based on the understanding that this risk exists and could materialize.

Selling vs. lending crypto: two different ways to avoid selling bitcoin

Placed side by side, both routes solve the same problem—you need euros—but with very different implications. Selling is immediate, carries no risk of subsequent liquidation, and closes the transaction instantly: you receive the money and there's nothing left to do. In return, you completely relinquish any future exposure to that portion of the bitcoin sold, and if there's a capital gain, you bear the corresponding tax burden in that same tax year.

A crypto loan completely changes those advantages and disadvantages. You keep your Bitcoin as collateral, maintain exposure to the asset, and, according to current Spanish tax regulations, the loan itself does not generate a taxable event. What you gain in continuity and tax benefits, you pay for in another form of risk: while the loan is active, there is a possibility that a sharp market downturn could trigger liquidation risk on the collateral you provided.

In other words, the difference isn't that one option is safe and the other isn't: both have a cost, just of a different nature. Selling resolves liquidity issues permanently but closes the door to future appreciation and brings forward the tax burden, while a crypto loan keeps that door open and defers the tax burden in exchange for assuming the liquidation risk for the duration of the transaction.

Choosing between one and the other depends less on which is “better” in the abstract and more on what kind of risk you are willing to manage: the risk of giving up your position, or the risk of the market moving against you while you have outstanding debt.

For whom does this alternative make sense, and for whom does it not?

A crypto loan tends to be a good fit for those who have been in the ecosystem for a while and have a well-established Bitcoin portfolio, not for someone just starting to buy their first Bitcoin. It usually makes sense for someone who needs a certain amount of euros for a one-off expense, a specific payment, or a personal emergency without wanting to affect their holdings, and also for those looking for a recurring source of liquidity instead of selling small amounts every time they need cash.

It's also a reasonable alternative for those who prefer to stay outside the traditional banking system for this type of transaction, either because their income profile doesn't fit the usual scoring criteria, or simply because they prefer not to depend on a bank's evaluation to access liquidity backed by their own assets. In these cases, crypto loans fill a real gap that neither conventional banks nor microloans address under the same conditions.

It doesn't make much sense for someone with a small Bitcoin position who needs a euro amount that would represent a very high LTV on that collateral, because the safety margin against market downturns would be minimal. Nor is it the right option for someone unwilling to monitor their loan regularly, since ignoring LTV warnings is the most common way to end up with an avoidable liquidation. And if your goal is to sell anyway in the short term, bringing that sale forward is usually simpler than taking out a crypto loan.

What role does regulation play in a European crypto loan?

In the European Union, the MiCA (Markets in Crypto-Assets) regulation establishes an authorization and oversight framework for crypto-asset service providers, including those offering loans backed by crypto collateral. While authorization under this framework does not eliminate the market and liquidation risks discussed earlier, it does provide a level of oversight, custody, and traceability not found on unregulated platforms or in decentralized protocols where users manage all operational risk independently.

This article draws on the complete guide to crypto lending from Bit2Me AcademyThis explains in more detail what types of collateral are accepted, how LTV levels are calculated, and what happens step by step at each warning threshold. If you are considering this option for the first time, it is advisable to read both articles before making any decisions regarding your Bitcoin.

Regulatory oversight and audited custody are compelling arguments against less transparent alternatives, but they don't replace your responsibility to understand every condition of the crypto loan you sign. The legal framework governs the environment in which you operate; the decision of how much collateral to provide and how much risk to assume remains yours.

Frequently asked questions about crypto lending and liquidity without selling your bitcoin