Ground Report | New Delhi: The best Bitcoin loan services; Bitcoin lending services firmly took hold of the cryptocurrency market this year, with the top three companies increasing their holdings by an average of 734%.
The availability of traditional financial services like loans and loans, along with more institution-centric means of custody and ways to get exposed to cryptocurrencies, really allowed institutions to enter the Bitcoin market this year. And unsurprisingly, these companies have seen an increase in demand.
“There has been a massive spike in interest across the board,” Camilla Churcher, global director of business development for Bitcoin’s Celsius loan service network, said Decrypt, adding that there has been an increase in the number of loans they service has made. been offered on the retail side.
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“On the institutional side, growth has been equally exponential,” he said. “A lot of activity in crypto has been taking off, more than ever in the last two weeks. More and more corporate clients [are] coming to our platforms.
The best Bitcoin loan services
So what is behind the explosive growth in the Bitcoin loan market? Where are the returns coming from and how will the rise of decentralized finance ( DeFi ) affect the industry?
What are Bitcoin lending companies?
Many people in the crypto industry choose to hold, or HODL, their Bitcoin for the long term, either as an investment strategy or because they believe in the longevity of Bitcoin as a hedge against inflation. But some choose to lend their Bitcoin through such services, to maintain the same exposure, but enjoy the performance.
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Current returns are 6% APY on BlockFi (below 2.5 Bitcoin), 6% APY on Nexo (8% when paying in Nexo tokens ), and 4.51% APY on Celsius Network (5.97% when paying in CEL tokens at up to 1 Bitcoin). Returns are paid in the cryptocurrency itself (or company tokens), so the US dollar value of returns will fluctuate.
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Another aspect is the tax. Trenchev targeted New York’s capital gains tax of 44%. “Half evaporates and goes to Uncle Sam, which is not great,” he said. “We are pushing this narrative to borrow against your assets instead of spending it.”
All three Bitcoin lending companies stated that the increased demand is coming from retail and institutional investors.
“It’s a good mix; we have a very diverse user base on the retail platform, ”said Celsius Network’s Churcher. While there are some big headlines, he added, “our average balance is around $ 27,000 out of 250,000 registered users.”
Similarly, BlockFi users have an average balance of $ 25,000, but Prince noted that they range from $ 50 to tens of millions. “It is a fairly diversified depository base and we are seeing growth across the board, across all segments and account sizes,” he said.