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Lifting the Veil on the BTC Lending Market
Published, 18 June, 2019
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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
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. Crypto assets are deposited into an account with Gemini or BitGo, our primary custodians and licensed depository trusts. For more information, please see BlockFi’s Terms of Service__.
Last updated on June 24th, 2022
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As of February 14, 2022, the BlockFi Interest Account (BIA) is no longer available to new clients who are US persons or persons located in the US and existing US clients with BIA accounts are unable to transfer new assets to their BIAs. Learn More.
BlockFi Lending LLC NMLS ID#1737520 | NMLS Consumer Access
BlockFi Trading LLC NMLS ID#1873137 | NMLS Consumer Access
Digital currency is not legal tender, is not backed by the government, and crypto accounts held with BlockFi are not subject to FDIC or SIPC protections. Digital currency values are not static and fluctuate due to market changes. Not all products and services are available in all geographic areas and are subject to applicable terms and conditions. Eligibility for particular products and services is subject to final determination by BlockFi. Rates for BlockFi products are subject to change.
BlockFi Rewards Credit Card: For more information, please see BlockFi’s Terms of Service. BlockFi is not a Bank. Cards are issued by Evolve Bank & Trust, Member FDIC, pursuant to a license from Visa® USA Inc. Rewards are not offered by Evolve Bank & Trust and are instead offered and managed by BlockFi.
BlockFi International Ltd. holds a Class F digital assets business license under the Digital Assets Business Act, 2018 (as amended) and is licensed by the Bermuda Monetary Authority to conduct the following digital assets business activities: (i) issuing, selling or redeeming virtual coins, tokens or any other form of digital assets (ii) operating as a digital asset exchange (iii) providing custodial wallet services (iv) operating as a digital asset derivative exchange provider and (v) operating as a digital assets services vendor.
See blockfi.com/terms for more information.
2022 © All Rights Reserved.
BlockFi Lending LLC NMLS ID#1737520 | NMLS Consumer Access
BlockFi Trading LLC NMLS ID#1873137 | NMLS Consumer Access
Digital currency is not legal tender, is not backed by the government, and crypto accounts held with BlockFi are not subject to FDIC or SIPC protections. Digital currency values are not static and fluctuate due to market changes. Not all products and services are available in all geographic areas and are subject to applicable terms and conditions. Eligibility for particular products and services is subject to final determination by BlockFi. Rates for BlockFi products are subject to change.
BlockFi Rewards Credit Card: For more information, please see BlockFi’s Terms of Service. BlockFi is not a Bank. Cards are issued by Evolve Bank & Trust, Member FDIC, pursuant to a license from Visa® USA Inc. Rewards are not offered by Evolve Bank & Trust and are instead offered and managed by BlockFi.
BlockFi International Ltd. holds a Class F digital assets business license under the Digital Assets Business Act, 2018 (as amended) and is licensed by the Bermuda Monetary Authority to conduct the following digital assets business activities: (i) issuing, selling or redeeming virtual coins, tokens or any other form of digital assets (ii) operating as a digital asset exchange (iii) providing custodial wallet services (iv) operating as a digital asset derivative exchange provider and (v) operating as a digital assets services vendor.
See blockfi.com/terms for more information.
2022 © All Rights Reserved.