BTC is currently trading at just a touch above $10,053. It fell abruptly to this level after a swift rejection during its pursuit of $11K zone. That attempt, though promising, was done on unconvincing volume.
Even now, volume remains shallow, signaling disinterest around current prices. However, despite this interruption of BTC’s march toward the moon, like Agent Mulder in the X-Files, we want to believe.
Bitcoin’s narrative, which has been lacking in recent weeks, is beginning to regain strength as Bakkt comes into the frame along with an ETF decision looming on the horizon. Bakkt’s physically-settled bitcoin futures are due to go live on September 23, and shortly after, on October 19, is the SEC’s final deadline for ruling on the VanEck/SolidX Bitcoin ETF.
Of the various proposals delivered to the SEC, the VanEck/SolidX ETF is roundly believed to have the best odds for approval. Market sentiment needs a narrative. Without an objective on the horizon, even if it’s a source of insecurity (such as the ETF, which hinges on a yes or no answer), sentiment falls away along with interest.
To see how much interest has waned since BTC fell away from its parabolic advance, check the Google Trend chart at the bottom of this post.
However, Bitcoin values may stabilize in time based on an often-overlooked aspect of the cryptocurrency financial ecosystem: cryptocurrency loans.
Crypto Loan Industry Hitting All-Time Highs
Crypto-collateralized loans are going from peak to peak as they lock-in value in the crypto-financial ecosystem. Graychain, the world’s first crypto credit bureau, recently released a report detailing the estimated $5 billion crypto loans that have gone out to borrowers up to now.
The way crypto collateralized loans work is simple. Say you want to take out a loan – you choose a lender like Celsius, Nexo, Unchained, or the various other companies available, then deposit your crypto on the platform. You’ll need to deposit crypto worth roughly 2x the loan amount (i.e., for a loan of $10,000 you’ll need to deposit $20,000 worth of collateral).
Part of the appeal behind crypto loans is that you don’t need to worry about credit or employment checks – the only thing that matters is that you’ve got the crypto to back the loan. Even if you don’t, there are some companies, like Salt Lending, who let you get away with riskier loan terms.
What all this means for the crypto ecosystem is that more and more people are locking in BTC, ETH, LTC, XRP, BCH, and other leading digital currencies for the duration of a loan term. Loan terms are commonly between 12 and 36 months.
It’s not only borrowers who are improving the HODL ratio of crypto. Lenders are enjoying the benefits of loaning their crypto on platforms like ETHLend, Dharma, and Compound at rates between 6–11% annual interest. To loan crypto and accrue interest, the process is roughly the same as borrowing – just lock it into a wallet on the platform of your choice.
The emergence of cryptocurrency lending also means that there is less incentive for selling crypto to fiat. Doing so is not only a taxable event, but it also means you’ll miss out on potential future gains. Instead of selling, cryptocurrency investors now have the option of leveraging their holdings.
Doing so not only keeps investors in the game but also holds value where it belongs – on the blockchain.
Bitcoin is Here To Stay - Please Believe That.