Lifting the Veil on the BTC Lending Market

    2019 has been the year of #stackingsats. From earning cash-back to earning interest in a BlockFi Interest Account (BIA), crypto investors have more options than ever to start earning more crypto. In May we discussed the main points about how the crypto lending market works. In May we saw that CME Bitcoin Futures Volume hit its highest point since 2017. In fact, CoinDesk reported that nearly 300,000 contracts were traded in the 31-day period at an average daily volume (ADV) of more than 13,600 contracts equal to $515 Million in notional value.

    Credit: CoinDesk

    The futures market is a great indicator for the health of the crypto lending market. As we’ve outlined previously, BlockFi lends crypto out to institutions in order to generate a yield for BIA customers. We’ve found that the BTC lending market is by far the most active and most liquid.

    With that in mind, we wanted to continue providing insights for our community about the types of companies participating in the crypto lending market. These roughly breakdown as 70% Market Makers, 25% Funds, and 5% Exchanges.

    Some of the products and companies enabled by borrowing crypto are as follows:

    • Spot & Derivatives (Futures, Perpetuals, Options)
    • Derivatives (OKEX, BitMex, CME)
    • Quanto Swaps (BitMex, OKEX)
    • Arbitrage
    • Margin Lending (Exchanges)

    When we lay this out for our customers we often get asked why a company like an exchange needs to borrow crypto. The main reason is that it allows exchanges to maximize its ability to provide a liquid marketplace, making it easier to execute trades quickly and efficiently. When you look at the CBOE (currently the second largest U.S. equities market operator in the world), they facilitate an average volume of 1,001,716,592 trades per day over the four exchanges they operate. In order to ensure smooth transactions for both parties of a trade, exchanges need to have enough liquid inventory on-hand. Lending companies like BlockFi bolster markets by creating additional liquidity.

    If you are a business or institution looking to borrow crypto, BlockFi wants to hear from you. Please visit https://blockfi.com/institutions and reach out to our team at institutions@blockfi.com to set up and introduction with our team.

    – The BlockFi Team

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    * BlockFi’s institutional partner, Gemini, provides secure custody for BlockFi client digital assets.
    * Rates for BlockFi products are subject to change. Digital currency is not legal tender, is not backed by the government, and BIA accounts are not subject to FDIC or SIPC protections. Products only available where permitted by law.
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    Disclaimer: Rates for BlockFi products are subject to change. Digital currency is not legal tender, is not backed by the government, and BIA accounts are riot subject to FDIC or SIPC protections. Security is our top priority. Please see our Vulnerability Disclosure Form and Bug Bounty Program.
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    Disclaimer: Rates for BlockFi products are subject to change. Digital currency is not legal tender, is not backed by the government, and BIA accounts are not subject to FDIC or SIPC protections. Security is our top priority. Please see our Vulnerability Disclosure Form and Bug Bounty Program.
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