Bitcoin Lending Grows to $24 Billion in Q4 2020

By Crypto News Bot February 27, 2021 In Bitcoin, Market Analysis

A recent report by Arcane Research shows that the crypto lending market is growing. And although it’s only around $20-30 Billion at the moment, experts are suggesting it could grow into the Trillions.

A growing lending market could be very bullish for bitcoin. Crypto-backed fiat loans allow users to employ their bitcoin to serve their everyday fiat-needs, without requiring the hodlers to sell and realize profits.

Put simply, the loans involves offering your Bitcoin to a company who in return loans you “dollars” (could be in the form of stablecoin such as USDC, USDT which you can sell for dollars). And then you pay interest on the loan (for example 36% per year interest paid in crypto). If the value of Bitcoin drops you may be asked to put more in to keep it above a specific loan to crypto collateral ratio. If you want your Bitcoin back you simply can pay the loan off.

Why Use BTC as Collateral for Loans?

There could be many reasons why you might not want to sell your crypto and get a loan instead, these include:

  • Tax deferment
  • The need for fiat
  • Leverage up and buy more crypto
  • Arbitrage
  • Market-making
  • Miners covering costs
  • Simply not wanting to sell your BTC
  • Loans without counter party risk and credit risk

Bitcoin can be transferred around the world, instantly, at almost no cost, any time of the day, and any day of the year, and with full finality. No other assets can match these properties today, making bitcoin the perfect collateral asset for the future.


Options to Get a Bitcoin Backed Loan in Australia

We’re doing some research into the best options for Australia at the moment, so stay tuned as we’ll publish this soon.

In the meantime checkout Binance Crypto Loans and BlockFi Crypto Loans.


Crypto News Bot

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