https://www.nasdaq.com/articles/as-...strates-value-in-collateral-market-2021-03-08 By Landon Manning With all of the attention that bitcoin has been receiving for its massive price increases lately, the asset is finding growth in a variety of financial use cases. For instance, reports are showing that it has taken the collateral world by storm. According to a report created through a collaboration between Arcane Research and Bitstamp, the use of bitcoin as collateral in loans had nearly doubled from 2019 to the fourth quarter 2020, with some 420,000 bitcoin being used for this very purpose in 2020 alone. Claiming that bitcoin is “the most portable asset the world has ever seen,” the study has shown that a wide variety of loan types have all contributed to the traffic of bitcoin skyrocketing in the last several months. The study goes on to state that it is not merely bitcoin’s price rise that accounts for this growth in the collateral market, but rather, it is several important underpinnings that make up the very foundation of Bitcoin’s blockchain technology. With no counterparty or credit risk possible in Bitcoin’s trustless model, Arcane Research and Bitstamp noted that “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.” This trend in loan collateral has not gone unnoticed worldwide. For example, February 28, 2021, before these two companies released their report, the South China Morning Post published its analysis of this phenomenon in Southeast Asia. With the U.S. dollar going through price fluctuations on the international currency market, a number of fintech and investment firms in Hong Kong and Singapore have been offering premium deals on using bitcoin as collateral for USD loans, according to the Post. As Richard Byrworth, CEO of the Singapore-based Digitex, told the paper, “If one sees the dollar value weakening against the bitcoin, that could be a better way to spend the fiat currency today than at a future date.” Still, in the grand scheme of the international business of loans and collateral, bitcoin has only taken a miniscule piece of the pie so far. With some $20 trillion tied up in the collateral market, the $30 billion that Arcane Research and Bitstamp estimate bitcoin occupies is barely a dent in the total. And yet, they note, this number has been growing astronomically, and the fundamentals are there for it to keep on doing so. The researchers conclude that they expect bitcoin to jump up to $1 trillion in the collateral market alone, and that this might happen sooner than many people think.
https://decrypt.co/61104/bitcoin-lending-firms-see-explosive-growth-and-surging-demand Bitcoin Lending Firms See Explosive Growth and Surging Demand BlockFi, Celsius Network and Nexo have hit milestones in assets under management, as the Bitcoin lending sector takes off. By Tim Copeland 3 min read Mar 12, 2021 In brief Top Bitcoin lending firms BlockFi, Celsius Network and Nexo have recently hit significant milestones. Combined, they now hold $30 billion in assets under management. Three Bitcoin lending firms have hit new milestones in the amount of cryptocurrency they are looking after on behalf of their customers. On Wednesday, lending firm Celsius Network announced that it had reached $10 billion in assets under management (AUM). This is up from $550 million in January last year, according to data previously provided to Decrypt. Bitcoin is the number one cryptocurrency by market cap. Image: Shutterstock. Yesterday, lending firm BlockFi's announcement of its $350 million Series D raise revealed that it is now looking after $15 billion in various cryptocurrencies. This is up from $250 million at the start of last year. According to lending firm Nexo, it has broken the $5 billion mark in assets under management, up from $750 million at the start of last year. Nexo managing partner Antoni Trenchev told Decrypt that its clients are increasingly adopting a long-term view. "Reaching $5 billion in AUM earlier this year cemented our hypothesis that our investors are true crypto HODLers," he added. While there has certainly been greater demand for Bitcoin lending services, part of their growth can be attributed to growing crypto prices. Over the last six months, the price of Bitcoin has grown 436%, with many cryptocurrencies following suit. On the other hand, the firms also look after stablecoins, which are (by definition) unaffected by such price rises. What are Bitcoin lending firms? BlockFi, Celsius Network and Nexo are three of the biggest firms dedicated to providing lending and borrowing services in the cryptocurrency space. To retail and institutional investors, they hand out high yields, paid in cryptocurrency, to those who let them look after their funds. Customers and traders can also use their cryptocurrency as collateral to take out loans. The three firms offer lending rates of around 4-6% for major cryptocurrencies and up to 10.5% on stablecoins. They then lend this cryptocurrency to traders who have put up collateral at a higher percentage, and make money by profiting from the difference.