No it is not. You complain of rising BTC costs and the interest you AGREED to pay as a reason not to pay up, but that is not the lenders fault. He could have sold that BTC he loaned you for a nice profit now, you want him to lose the BTC?  How is the lender wrong here? You are in the wrong having not followed the loan agreement. You are not new to BTC by a long shot but failed to protect yourself against volatility.
So you basically want him to forgive the loan and you skate off free and clear?  Where is the reasoning behind this stance?
Instead of playing a blame/excuse game, why not get with the lender and work out an agreement to solve the only issue: the loan agreement.