The bear market has not affected cryptocurrency creditors as they have been able to make profits by selling to cryptocurrency users. This is according to a report by Bloomberg yesterday, on January 2.
Market believers and institutional investors still buy cryptos
Cryptocurrency lenders have been able to make a substantial profit by selling digital currencies to two main borrowers: Those who believe strongly in the cryptocurrency market and expect it to bounce back very strong as well institutional investors.
The bearish market has affected the fortunes of most cryptocurrencies as they have lost roughly 80 percent of their value over the past twelve months. Over the past two months, some crypto and blockchain companies have begun restructuring their operations as they look for ways to continue operations in the bear markets.
Some blockchain and crypto companies have been forced to shut down their operations while some are simply laying off team members so that they can stay afloat. Despite these corrective happenings in the crypto sector, cryptocurrency lending has become a booming business according to the report by Bloomberg.
Profiting off both sides
According to the report, creditors focusing on the crypto arena say they’re finding strong demand from borrowers who don’t want to sell their virtual coins at depressed prices, as well as from big investors eager to borrow coins for short selling. It’s putting lenders on both sides of Bitcoin’s bust: Helping believers pay their bills while awaiting a rebound, and also enabling bets by people who think the drop has further to go.
The lenders have been able to make profits in the crypto sector by providing flexible structures, affordable interest rates and high levels of fund security.
One of the companies, BlockFi, revealed that it had experienced a boom in its revenue and customer base over the past six months after Mike Novogratz invested USD 52.5 million in them. They stated that by developing a USD-based crypto loaning fund that enabled holders of Ether and Bitcoin to borrow money, digital assets were allowed to be used as collateral. Due to this service they offer, they have been able to make more profit in the sector. The company has raised extra funds from investors such as Akuna Capital and Morgan Creek Digital and has expanded its services to 42 states within the United States.
Another lender, Aave, which developed online crypto-lending marketplace ETHLend, has experienced massive growth and recently opened an office in London. They are also making plans to enter the U.S market very soon. Salt Lending meanwhile has 80 people working under it and added that it is hiring more every month as its revenue ticks higher. According to CEO Bill Sinclair, the company’s growth will see it expand its operations to all 50 states by the end of 2019.
Most cryptocurrency creditors set up shop back in 2017. They started by offering enthusiasts a way to borrow cash without having to sell down their stockpiles of Bitcoin or other cryptocurrencies. However, the crash in the crypto prices last year saw the lenders venture into new services and were able to sustain their growth.
Michael Moro, chief executive officer of Genesis Capital, expresses the view that the bear market has contributed to the growth of the lending market. During an interview with Bloomberg, he stated that “The bear market has certainly helped – at least (it) has fueled the growth.”
Genesis Capital, which was launched in March last year, has also experienced similar growth. The company, which allows institutional investors to borrow virtual coins by depositing U.S. dollars, has already issued USD 700 million of loans.
Moro added that “We’ve been profitable from day one. We’ve certainly proven that there is market demand, that there’s product fit and that it’s time to invest even more in this side of the business.”