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How Does the Concept of “Haircut” Apply to Crypto Collateral?

A percentage reduction applied to the market value of crypto collateral to account for its volatility and liquidation risk.
Greeks.Live23.11.25

How Does the Concept of “Haircut” Apply to Crypto Collateral?

A haircut is a percentage reduction applied to the market value of a cryptocurrency used as collateral. For example, a 20% haircut means $100 of crypto is valued at $80 for margin purposes.

This is a risk management tool to account for the asset's volatility and the risk of its value dropping before it can be liquidated.

What Is a “Haircut” in the Context of Collateral Valuation?
What Is the Concept of ‘Haircut’ When Using Non-Cash Assets as Collateral?
How Does the Exchange’s “Haircut” Policy Mitigate the Risk of Volatile Collateral?
How Is the Value of Collateral Determined for Volatile Assets like Cryptocurrency?

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