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    Margin Call is under control: How to avoid a forced loan repayment?

    Posted on by Аврора

    What is Margin Call

    Margin Call can be thought of as a risk limit. It is a critical situation, in which the loan is forcibly stopped, and the collateral is used to pay off the user’s debt.

    Why the loan is forced to finish

    Until the end of the loan period, the collateral stored on the user’s account balance continues to increase and decrease following a BTC rate. If the the BTC rate decreases by 10%, the collateral value also decreases by 10%. Since the minimum collateral value is limited by the used loan limit, it cannot decline indefinitely.

    When does Margin Call occur

    If the value of the collateral at the current exchange rate is only 10% higher than the used loan limit, Margin Call occurs. In the other words, it happens when the LTV ratio exceeds 90%. A decline of the Bitcoin exchange rate leads to a decrease in the balance level too but to an increase in the LTV ratio.

    The higher the LTV is, the higher the risk of the Margin Call is. LTV increases in three cases:
    1) upon obtaining a loan;
    2) upon withdrawing bitcoin from the account balance;
    3) when Bitcoin’s price decreases.

    Learn in detail about the LTV ratio.

    Consider an example:

    Used loan limit: 840 USD;
    Current account balance: 1000 USD;
    Current LTV (loan-to-value): $ 840 / $ 1000 * 100% = 84%

    Margin Call occurs at the balance value: $ 840 + 10% = $ 924
    Margin Call occurs at the LTV: $ 840 / $ 924 > 90%

    How to prevent the Margin Call

    In order to prevent the Margin Call occurrence, it’s needed to lower the LTV. This can be done by adding additional collateral to the account balance or by partial pay off of the loan. It is recommended to keep LTV at 50% to protect yourself from the risk of a sharp decline in the price of Bitcoin.

    By default, as soon as the LTV exceeds 80%, the user starts to receive notifications by email about a high risk of a Margin Call. Reminders will be sent every 3 hours. On the “Notifications” page, you can manage the settings to decrease or increase the LTV level at which you want to receive the first Margin Call reminder and the frequency of the notifications.

    Biterest has the highest initial LTV — 83%.
    Unlike other crypto lending platforms, where Margin Call occurs when LTV increases to 80%, on Biterest it only happens when LTV exceeds 90%.

    Sign in or Create Biterest Account

    How to repay a loan and close a crypto credit line on Biterest

    Posted on by Аврора

    A couple of words about Biterest

    The main goal in a bitcoin-backed loan is to receive money without having to sell the Bitcoin.

    On Biterest, there is no mandatory identity verification, no credit and other documents checks compare to how it works on the other platforms. Therefore, immediately after the bitcoin collateral was deposited to the account balance, the user can make an instant loan request for any amount within their loan limit.

    Is there a minimum loan period

    There is no minimum loan period on Biterest. The loan period starts at the time of loan issuance and has no fixed maturity dates. You can use the money as much as you need and repay the used loan limit at any time.

    It is available to pay off the loan partly or in full. In the case of partial repayment, the accrued interest will be paid first, then the loan body.

    How the interest accrues on the loan

    The annual interest rate is 12%. After the loan is issued, the interest will be automatically accrued for the first 14 days of the loan. Starting from the 15th day, interest will be calculated daily, in the amount of 0.033% of the loan.

    The accrued interest is taken into the used loan limit, but there is no interest capitalization (in other words, no interest is accrued on interest).

    Consider an example:

    Loan amount: 1000 USD;
    Interest rate: 12% per annum or 0,033% daily;
    Minimal accrual amount: $ 1000 * 12% * 14 / 365 = $ 4,6

    Sign in or Create a Biterest account

    How to repay the loan

    To proceed to repayment page, click the “Repay a loan” button on the “Instant loan” page. The button is available only to users who have a outgoing loan.

    There are two repayment methods: directly from the account balance or by sending cryptocurrency to the specified address. Once repaid, your loan limit will increase your LTV and Margin Call risk will decrease.

    Bitcoin redemption from the account balance is carried out instantly by clicking on the “Repay” button.

    In case of making a self-repayment with cryptocurrency, please copy the address which will be indicated to you in the window and send the calculated amount to it. Immediately after the that, click the “Confirm” button.

    The available crypto currencies for loan repayment: Tether (USDT), Bitcoin (BTC), Ethereum (ETH).

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    How to pay off the interest on the loan

    The methods to repay the interest are the same as to repay the loan.

    The interest accrued for the previous month has to be repaid by the 4th day of 00:00 GMT of the current month. If you do not pay off the accrued interest by yourself, they will be automatically debited from your account balance. Three days before the due date, you will receive an email reminder.

    LTV: How does Bitcoin price affect Loan-to-Value ratio?

    Posted on by Аврора

    What does LTV mean?

    LTV (loan-to-value) expresses the ratio of the used loan limit to the current account balance. It is calculated as the loan amount (USD) divided by the current value of Bitcoin (USD) on the user’s balance.

    As soon as the loan is issued by Biterest, the information about the LTV ratio will appear in the Biterest account. It will help the user to control the balance between the used loan limit and the collateral value.

    Consider an example:

    Used loan limit: 1000 USD;
    Current account balance: 1200 USD;
    LTV (loan-to-value): $ 1000 / $ 1200 * 100% = 83,3%

    The highest initial LTV among all instant crypto lendings — 83% — is on Biterest. You can get loans up to 83% of your Bitcoin value, unlike other lending platfrorms which perform only 50% LTV.

    Login or Create Biterest Account

    What makes LTV change

    The greater the difference between the used loan limit and balance value is, the lower the LTV ratio will be.

    As you know Bitcoin rate is very volatilitile and its price can either sharply increase or unexpectedly decrease. Therefore, the Biterest platform analyzes Bitcoin price fluctuations on an ongoing basis and shows the account balance level in accordance with the current Bitcoin value.

    When the Bitcoin rate moves up, the LTV decreases and vice versa.

    Move on to the example:

    Bitcoin price has increased by 10% so that the account balance increased to $1320 from $1200.

    Used loan limit: 1000 USD;
    Current account balance: 1320 USD;
    LTV (loan-to-value): $ 1000 / $ 1320 * 100% = 76%

    The Result: Thanks to the growth of the Bitcoin price, the level of the account balance increased. Therefore, the loan limit increased too and now the user can receive more funds in a loan without adding collateral.

    If nothing is done, the amount on the balance will continue to increase and be used as a “buffer” from negative consequences, for example, Margin Call which may occur after a rapid decline in Bitcoin price.

    If Bitcoin price sharply decline …

    If the Bitcoin price decreases, the LTV increases. However, the balance cannot go down indefinitely, since it is limited by the amount of the used loan limit by the user.

    Thus, the LTV in the account can reach a maximum of 90%, after which Margin Call occurs. In this situation, the loan is automatically repaid using the bitcoin from the account balance.

    If the LTV exceeds 80%, the user will begin to receive email notifications of a risk of Margin Call. To avoid Margin Call, they need to partly repay their loan or provide additional collateral by replenishing the account balance. It is recommended to keep the LTV level at around 50% in order to protect yourself against a sharp drop in Bitcoin price.

    The example:

    The Bitcoin price decreased by 16,6% and the balance accordingly decreased from $1320 to $1100.

    Used loan limit: 1000 USD;
    Current account balance: 1100 USD;
    LTV (loan-to-value): $ 1000 / $ 1100 * 100% > 90%

    The Rusult: In our example, Margin Call will occur when the account balance decreases by $220 and become 1100 USD.

    What is the difference between “bitcoin loan” and “bitcoin-backed loan”

    Posted on by admin

    Why to apply for a loan on Biterest

    All the deals on Biterest are made solely for the purpose of receiving a USD loan against bitcoin in order to provide the Biterest user with an opportunity to save their bitcoin for the future.

    Biterest does not contribute to the receiving of a cryptocurrency in a loan, only provides an opportunity to receive bitcoin-backed loans. While you can borrow USD and hodl your bitcoin as collateral on Biterest, there is no need to cash out bitcoin to fiat or other cryptocurrency.

    Double profit of bitcoin-backed loans on Biterest

    All loans are fixed is the US dollars. Therefore, the loan repayment amount consists of loan principal (USD) and accrued interest (USD).

    For example, you applied for a loan of 1200 USD at a BTC exchange rate of 8000 USD, the amount to receive was 0.15000000 BTC. The collateral amount has to be 20% higher than the loan amount, so that you needed to deposit 1440 USD or 0.18000000 BTC.

    Consider an example:

    Initial Bitcoin rate: 8000 USD/BTC;
    Loan amount: 1200 USD (fixed);
    Amount to receive: 0.15000000 BTC;
    Initial collateral value: 1440 USD;
    Collateral: 0.18000000 BTC (fixed);

    20 days later, the BTC price increased by 30% to 10400 USD, so your collateral value increased from 1440 USD to 1872 USD.

    The repayment amount is 1207,92 USD, because the loan principal is 1200 USD and the interest is 7,92 USD (1200 x 0,033% x 20). Hence, if you repay the loan in BTC, you will refund 0.11614615 BTC (1207,92 / 10400) which is 0,03385383 BTC less than you initially borrowed.

    Current Bitcoin rate: 10400 USD/BTC (+30%);
    Collateral: 0.18000000 BTC (fixed);
    Current collateral value: 1872 USD (+30%);
    Loan repayment amount: 1207,92 USD;
    Final amount to repay: 0.11614615 BTC (-23%);

    As a result of an increasing bitcoin value, you received income not only from the growth of the collateral value by 30% but also won on the difference between the initially received amount in BTC and the amount to repay. Although your repayment amount increased by 7,92 USD, you would repay in bitcoin less by 0,03385383 BTC or 352 USD (0,03385383 x 10400).

    Apply for a loan

    Biterest.com | Affiliate program

    Posted on by admin

    Please note that the administration of Biterest has the right to change the terms and conditions of the current affiliate program.

    Take part in the Biterest Affiliate Program!

    Invite new users and earn 30 USD for a new borrower. You will be provided with an affiliate link, through which you can invite new users and in return receive money.

    An affiliate is a user who invites other users on Biterest through their affiliate link.

    An invited user is a new user who was registered using an affiliate link.

    To start earning with Biterest, you need to:

    • Sign up for Biterest. Contact support or chat to be approved as a partner. Your affiliate link will be available in your account
    • Share your affiliate link on your website, blog or YouTube channel
    • Add your affiliate link to your comments and discussions
    • Share the link on social media, messengers, chats, and forums
    • Send your link to your friends that are actively using cryptocurrencies
    • Or use any other effective way to attract more new users on Biterest, be creative!

    The terms of the Biterest affiliate program:

    • You can link to any Biterest page, for example, the main page, blog, page about the loan terms of the service
    • You will earn for attracting new users who came to the site through your affiliate link and successfully received a loan
    • The payment will be done, if the invited user receives a loan of at least 100 USD for a period of 1 month or more
    • Reward will be instantly credited to your affiliate balance. The balance currency is USD
    • The amount of the reward is 30 USD for the invited user
    • Funds will be credited to the Affiliate Balance instantly, but will become available for withdrawal after 30 day
    • Funds from the affiliate balance can be withdrawn to a bitcoin address or transferred to the balance of your Biterest account
    • The minimum amount available for withdrawal to a bitcoin address is 10 USD

    How to calculate a remuneration:

    On 1st of May, you invite the user through your affiliate link.
    On 2nd of May, the user receives a loan (min. 100 USD) and uses the loan for at least 1 month.
    On 2nd of May, after granting the loan to the invited user, 30 USD is credited to your affiliate balance.
    On 2d of June, your money becomes available for withdrawal if all the conditions are met.

    How to get the affiliate link?

    Open your Biterest account. In the Affilliate program section, there is your affiliate link. If you have questions, contact Biterest support on the Help page. 

    Attention!

    Please note the affiliate balance will not be available for withdrawal if the Biterest administration suspects any fraud or cheating. The administration reserves the right to terminate partnerships with unscrupulous partners anytime, or to refuse cooperation with any partner without giving a reason.

    Biterest crypto credit line: How much is it possible to receive in a loan?

    Posted on by Аврора

    What is the maximum loan amount

    The maximum loan amount, in the other words “a loan limit”, depends on the collateral value and the Bitcoin price. Thus, the more bitcoin collateral a user stores on their Biterest account balance, the large their loan limit is.

    On Biterest, you can receive a much larger loan with the same amount of collateral than on other platforms. The reason is that the loan limit on Biterest is equal to 83% of the collateral value compared to other crypto lending services, where it does not exceed 50-70%.

    Consider an example:

    Collateral value: 1500 USD;
    Loan limit on Biterest: 1250 USD (Loat-to-value 83%);
    Loan limit on the other services: 750 (Loan-to-value 50%);

    Why is it important to track the LTV ratio?

    The LTV (loan-to-value) expresses the ratio between the received loan and the current balance value. When the used loan limit is $1200 and the collateral value is $1500, LTV is 80%. If you repay partly the loan and your used limit decreases to $800, LTV will become 53%.

    You should take into account that Bitcoin is a highly volatile asset, so that its price can either sharply goes up or unexpectedly drops down. Therefore, the Biterest platform always updates your balance level and LTV ratio in accordance with the current Bitcoin value.

    The two possible scenarios:

    In the positive scenario, the Bitcoin exchange rate increases and the LTV decreases. Thanks to the rise in the Bitcoin price, the loan limit increases and you can get more funds in a loan without a need to add extra collateral.

    Unfortunately, there is also an opposite situation, when the Bitcoin price decreases. This provoke an increase of the LTV ratio as the balance level declines. The balance cannot go down indefinitely, since its level is limited by the amount of the used loan limit. Therefore, this entails the risk of an automatic loan repayment — Margin Call occurrence.

    Negative side: If nothing is done, LTV will exceed its critical level of 90% and Margin Call will occur. The loan will be paid off with the collateral from the balance.

    Positive side: You can always top up your balance with extra collateral or partially repay the loan. This will reduce the LTV ratio and prevent Margin Call.

    Create a Biterest account