The main objective of the Bitcoin lending platforms is to
Give users more leverage in their trading activities. Leverage is an investment strategy where you multiply effectiveness by borrowed money. It is the same strategy as there is on the stock market. In theory, the concept sounds fantastic. You get a loan for $10,000, buy bitcoins, the price goes up and you make profit. In reality, however, the process is much more difficult and, in most cases, investors have huge piles of debt after that. Because, as we have all noticed, the price has fallen quite since January 2018, but is now growing rapidly again!
Many new investors would probably have been better off holding bitcoins,
Instead, they invested in cheaper altcoins because they could buy these at a fraction of the cost of the bitcoin. Experienced crypto investors know, though, that holding a percentage of bitcoin can be far more valuable than holding a single altcoin. Lenders quickly recognized both investors “desire for full coins and the distancing of traditional lending platforms in the crypto world. That desire led to a flurry of bitcoin lending platforms last year. These platforms provide users with more liquidity to buy their crypto.
Another emerging strategy in the bitcoin lending sector is direct crypto loans.
These platforms skip fiat currency overall. Instead, you get your balance directly in Bitcoin. There are traditionally two types of direct bitcoin loans. The first type of loan comes from a lending company. The second type of Bitcoin Direct lending strategy involves connecting with other investors who want to borrow their bitcoin in exchange for some interest on the loan. On the other side of the equation, you have around a thousand Bitcoin holders who control the vast majority of existing bitcoins. Most of these people are longtime Bitcoin Holders and therefore have no desire to sell their valuable coins. It’s been about 1.5 years since bitcoin hit an all-time high just below USD 20,000. For those who got loans at that price, there’s no doubt they regret that decision for now.