Loans cryptocurrencies have been a sector interesting to observe during the past year, as new products have proliferated in the market. Volatility has always been an active contributor to the loan rates, and with the recent increase in volatility, the loan rates on the exchanges of encryption have reached up to 149% in some criptoactivos (for example, NEO), with rates even as high as 38% winnable in USD. These developments created the opportune time to explore products of margin loans.
Loan margin in traditional markets
The margin loans have been a popular service offered by brokers, traditional for decades. It is a process by which brokers provide securities or cash to customers for commercial purposes. The rates loan margin offered by brokers traditional (for example, Charles Schwarb) generally vary between 5.5% and 11%, depending on the broker and the value of the loan. For brokers, loans are a business is wonderfully profitable. Given that Charles Schwarb only pays a paltry 0.18% of your product-saving high-performance, it is not surprising that 57% of its revenues from net interest revenue (i.e., profits from interest on loans after deducting interest paid to the account owners) agree with your presentation, 2018 10-K of the SEC. Despite the fact that they are a broker and not a bank, only 40% of their revenue comes from asset management and commercial rates.
Loan in markets cryptocurrencies
The technology Blockchain has become synonymous with the democratization of the financial opportunities; being also true in the space of margin loans, as anyone can pay their criptoactivos and earn the fees that the brokers and institutions have been enjoying for years. Platforms such as Celsius, Nexus and Invictus Capital have allowed the interest income to be transferred directly to the public retail at interest rates that, in some cases, are up to 10 times more than what is available in the traditional market. The development of platforms loans cryptocurrencies can be attributed in large measure to the maturation of the market cryptocurrencies after 2017. The last report of Credmark, a credit agency of cryptocurrencies, stresses that the loan market has expanded to more than $ 6.4 billion in loans originated in the third quarter of 2019. This is from a few hundred million just a few years before. In addition, the loan market is experiencing a quarterly growth of 497 in the new loans originated. In the sector of cryptocurrencies, the loan market works mostly with a few important participants, namely, miners, merchants, and individuals of high net worth and institutions. The impeller most important of the demand for loans (especially loans provided through margin loans), is of the merchants. Most of the large exchanges of cryptocurrencies facilitate any form of margin trading on their platforms. However, some exchanges, such as Bitfinex and Poloniex, allow loans of peer-to-peer using an engine compatible to bring together the suppliers and merchants of liquidity. The volumes of loans foreign exchange are growing as operators look for options of liquidity quick and affordable, and the lenders are looking for returns attractive.
The market volatility continues to drive the activity of margin loans
The volatility of the cryptocurrencies is the key driver of growth in the volume of margin loans, as greater volatility motivates a higher commercial activity. The peaks in the loan rates often correlate with changes in the prices of Bitcoin as operators seek to increase their exposure to the market. As an example, the 30% increase in the price of bitcoin on October 25, 2019 caused a corresponding increase in the lending rates in USD rates, charge-offs which increased to a 20% annual during the month. Although the lending rates in USD remain the volatility of the market encryption, the margin on loan in USD do not expose your trading capital to the fluctuations of the market prices of encryption behind. In addition to the risks of reduction of capital, the returns on the margin loans provide benefits of diversification.
Presentation of the Fund of margin Loans Invictus
Invictus Capital has a history of tracks distinguished within the space of criptoactivos with the launch of the index funds CRYPTO20, Crypto10 Hedged and Hyperion, (a fund of Blockchain VC). Invictus has further developed an innovative fund of margin loans to allow investors to obtain returns liabilities based on dollars of high performance. The Invictus Margin Lending Fund (IML) offers investors a unique opportunity to take advantage of a burgeoning market that, to date, has provided yields consistent well above the yields traditional money market. With the best current rate for short-term saving in the united States at 2% APY, the background IML provides a unique opportunity for yields higher than 10%. Along with returns, the fund also has benefits structural compelling, including liquidity 24 hours a day, 7 days a week via subscriptions and redemptions of contracts intelligent automated. Investors can redeem their tokens by TUSD (the currency operating in the background) when you want to get yields. With the continued growth of the loan market and the increased demand from the buy side, it is expected that the yields of the loans in USD and, therefore, the returns of the fund, IML continue to remain impressive. For more information you can visit the official website of Invictus Capital: https://invictuscapital.com/imlFund The following two tabs change content below. I am a student of economics, interested in innovation and technological development, always faithful to that tomorrow will be a better day.