Crypto Loan Margin Calls and Liquidation

For anyone considering a crypto-backed loan, the useful question is how far prices can fall before action is required. This guide explains the thresholds, shows the arithmetic and identifies the terms to check before borrowing.

How loan-to-value changes

Loan-to-value (LTV) compares the outstanding loan balance with the current value of the collateral. A $50,000 balance secured by $100,000 of collateral has an LTV of 50%.

Three ratios are central to this guide:

• Starting LTV: the ratio when the loan opens. A maximum starting LTV is a borrowing ceiling, not a recommended target.
• Margin-call LTV: the threshold at which the borrower must restore the position under the loan terms.
• Liquidation LTV: the threshold at which collateral may be sold if the position has not been restored.

Arvexo also describes an earlier warning threshold, separate from these ratios. Its notification guide says alerts appear by email and in the dashboard. The thresholds for an individual loan are shown in its final terms. 1

If the balance stays unchanged, a fall in collateral value raises LTV. The balance can change too: Arvexo states that unpaid interest is added to the balance, which also raises LTV. 2

01 / Collateral headroom

How far can prices fall?

The table uses Arvexo's public asset parameters retrieved on 21 September 2026. It assumes each loan starts at the maximum LTV shown. These are a dated public-data snapshot, not a personalised offer or a substitute for the signed loan agreement. 3

Price fall to a threshold = (1 − starting LTV ÷ threshold LTV) × 100%.

These calculations hold the loan balance, collateral quantity and thresholds constant. They exclude added interest, fees, repayments, extra collateral and execution costs. Percentages are rounded to one decimal place; a trigger is not a guaranteed sale price.

A Bitcoin example: 70% versus 50% LTV

Assume one Bitcoin is worth $100,000 and secures a $70,000 loan. At an 80% margin-call threshold, the trigger price is $70,000 ÷ 0.80 = $87,500: a 12.5% fall. At an 85% liquidation threshold, it is approximately $82,353: a 17.6% fall.

With the same coin and thresholds but a $50,000 loan, the margin-call trigger becomes $62,500: a 37.5% fall from $100,000. Borrowing less creates more room for a price decline, but does not remove liquidation or lender risk.

A wider percentage buffer does not make one asset safer overall. Volatility, liquidity and the actual loan terms also matter.

02 / A price fall in context

What a 30% price fall would mean

ESMA's October 2022 report records that Bitcoin and Ether fell by more than 30% within a week during the market turmoil around Terra's collapse in May 2022. This is a historical observation about those two assets. 4

Separately, apply a hypothetical 30% fall to each row of the table, keeping the stated assumptions unchanged. It would cross every listed liquidation threshold. This is a stress test using the parameters above, not a claim that all five assets experienced that event in 2022.

The starting LTV therefore matters as much as the maximum available. A lower starting LTV provides more headroom, without guaranteeing protection from a sharp fall.

Why liquidation can happen quickly

The ECB's May 2022 review explains that falling crypto collateral values can breach LTV limits and force borrowers to post more collateral. 5

The Financial Stability Board's February 2023 report describes a related mechanism in decentralised finance (DeFi): automatic liquidations can sell collateral into thin markets, pushing prices lower and spreading stress. That report concerns DeFi; it does not establish how Arvexo executes a liquidation. 6

For a borrower, the distinction is between the trigger and the outcome. A price can move through a threshold quickly, while sale proceeds depend on execution, liquidity and applicable costs. An alert does not itself guarantee enough time to restore the position.

03 / Take informed action

What to do when a margin call arrives

Arvexo's margin-call guide describes two ways to restore the position: add collateral or repay part of the outstanding balance. It says the notice states the response time and the loan page shows the amount required. 7

1. Check the current position. Review the live LTV, the required target and the deadline in the notice. Do not assume that moving just below the margin-call threshold is sufficient.
2. Choose an available response. Use the approved deposit or repayment route. Check the amount, network and any applicable fees before transferring funds.
3. Allow for confirmation. Starting a transfer is not the same as having it credited. Arvexo says the LTV updates once the deposit or payment is confirmed. 7
4. Verify the result. Check that the position is restored. If the payment is pending or the instruction is unclear, contact support promptly.

Doing nothing leaves the position exposed to further price falls and possible liquidation. Do not assume the stated response period prevents liquidation if the liquidation threshold is reached first; check the agreement.

Arvexo's liquidation guide says collateral may be sold to restore the position or repay the loan in full. Proceeds cover the balance, interest and any specified liquidation fee. Remaining collateral stays in the loan wallet until the loan is settled. Check the agreement for any liability if sale proceeds are insufficient. 8

Does a margin call mean I owe money?

Not a new sum. It means the loan's LTV has reached the threshold at which the agreement requires you to restore it, by adding collateral or repaying part of the principal, within the stated window. Nothing extra is owed at that moment. If you do nothing and the price keeps falling, the liquidation threshold is next, and that does change what you owe: collateral is sold, and the agreement says whether any shortfall remains yours.

Securities margin rules are a comparison, not a promise

FINRA Rule 2264 requires specified disclosures for non-institutional margin accounts at FINRA member firms. These explain that assets can be sold without prior contact, that customers cannot choose which assets are sold and that an extension of time is not an entitlement. 9

That rule concerns securities margin accounts. It should not be assumed to govern a crypto-backed loan merely because both involve collateral. A borrower's rights depend on the lender, product, jurisdiction, applicable law and agreement. Read the notice, liquidation and dispute provisions rather than assuming brokerage-account protections carry across.

04 / Look beyond the price

Your lender is a separate source of risk

Price risk is only part of the picture. In January 2023, the Celsius bankruptcy court found that assets in its Earn accounts had become Celsius's property under the relevant terms, subject to reserved defences. Those assets became part of its bankruptcy estates. 10

That ruling concerned a particular product and contract; it is not a blanket rule for every custody arrangement or crypto-backed loan. It illustrates why ownership and reuse rights need careful attention.

Before pledging assets, ask who holds them, whether they are segregated, whether the lender can reuse them and what happens if the lender or custodian fails. Arvexo describes its arrangements on its security page; check those statements against your agreement.

A short checklist before you borrow

• Compare a lower starting LTV with the maximum available.
• Know your warning, margin-call and liquidation thresholds, including the equivalent asset prices under your assumptions.
• Check notification channels, response times and the LTV you must restore.
• Plan how a collateral top-up or repayment would be funded and confirmed.
• Review liquidation fees, sale procedures and any remaining debt liability.
• Understand custody, ownership, reuse rights and the consequences of lender failure.

Use the loan calculator to explore an indicative estimate, and read the LTV guide. Arvexo's public terms state that the signed loan agreement, when issued, controls the facility.

Collateral can fall in value and be sold. This article is for general informational purposes only and does not constitute financial, investment, legal, or tax advice.

Sources

Numbered notes in the article point here. Public pages and asset parameters were checked on 21 September 2026.

1. Arvexo — notification thresholds. Warning, margin call and liquidation alerts.
2. Arvexo — missed payments. Unpaid interest and the outstanding balance.
3. Arvexo — public asset parameters. Live snapshot retrieved 21 September 2026. Production assets only.
4. ESMA — Crypto-assets and financial stability, October 2022, p. 12: Bitcoin and Ether during the May 2022 turmoil.
5. ECB — Decrypting financial stability risks in crypto-asset markets, Financial Stability Review, May 2022, section 5.
6. FSB — The Financial Stability Risks of Decentralised Finance, 16 February 2023, pp. 20–21: automatic liquidations in DeFi.
7. Arvexo — What is a margin call? Response options, notice and confirmation.
8. Arvexo — How does liquidation work? Collateral sales, costs and remaining collateral.
9. FINRA — Rule 2264, Margin Account Disclosure Statement; scope and prescribed disclosures.
10. US Bankruptcy Court, SDNY — Celsius Earn-account opinion, 4 January 2023, pp. 4–5 and 45: product-specific ownership ruling.