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According to a Bloomberg report, lenders operating in the cryptocurrency are currently experiencing strong demand from investors who do not want to sell their cryptocurrency tokens to the low values they have fallen to. Loan companies are allowing these people to withdraw legal tender money using their cryptographic tokens as collateral. In this way, those who believe that the market will become bullish again can continue to pay bills while waiting for the rebound.
A prime example of this is the cryptographic-based loan company, BlockFi. This company allows customers to withdraw US dollars in exchange for bitcoin (BTC), ethereum (ETH) or litecoin (LTC) as collateral for repayment. This means that encrypted investors can use their currencies to obtain fiat funding without actually selling them.
"Low risk" loan
If the value of the guarantee falls significantly in value, customers will have to put more funding into it or deal with the sale of their crypts. We speak of margin call. Margin calls on BlockFi are activated if the collateral value falls 35-60 percent from the time the loan was granted. Chief Executive Zac Prince claims that around 20% of customers have been asked for margins last year. Many of these borrowers have added extra guarantees after receiving the notice.
According to Bloomberg, Prince stated in a telephone interview that their method is a "type of low-risk loan" after stating that the company has never had a "loss of capital".
BlockFi has grown tenfold since June 2018, according to Bloomberg. It was at this time that the big blockchain investment company Galaxy Digital Ventures invested $ 52.5 million in the company.
Among the other lenders benefiting from the current economic situation is the Genesis Capital group. This company operates in the reverse of BlockFi; cryptocurrency loan in exchange for US dollars. Genesis Capital has issued the equivalent of $ 700 million in loans since March, according to Bloomberg. The CEO of Genesis Capital, Michael Moro, reported that "the bear market has certainly helped, at least it has fueled growth".
The genesis plans to double its staff in the next year up to 12 people, while other companies in the cryptographic sphere have considered layoffs.
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