Blockchain and cryptocurrency gave birth to a new generation of millionaires, opened up new opportunities for specialists in more or less every sphere of business, and forced skeptics to believe in the potential of these new technologies. The period of time from the end of November of 2017 and until March of 2018 was the time of the «Gold Rush», when everyone but the most uneducated folks talked about cryptocurrencies and the opportunity to make a quick buck by launching blockchain projects, investing in ICOs, and simply speculating on crypto exchanges.
One of the most peculiar characteristics of the blockchain market is its high dynamics. Not only is there something new every day, but the ups and downs of the market are pretty dynamic. The time of the «Gold Rush» is over. What is going to happen next?
In this article, we are going to outline three of the most vivid trends that are associated with the current state of the crypto market. In addition, we will offer you one piece of practical advice that you may choose to follow.
Trend 1: Stagnation in the Value of Cryptos
Beginning from May of 2018, we are witnessing stagnation in the value of the majority of cryptocurrencies. The total capitalization of the market, according to data taken from coinmarketcap.com, has been at a level around 200 billion dollars for the past couple of months. The volume is still good, although it is not as impressive as it used to be, if you compare this to the capitalization of 800 billion dollars that happened back in January of 2018.
Trend 2: Bitcoin to Reinforce Its Position
Despite all the efforts that were taken by alternative projects, Bitcoin is still dominant amongst other cryptocurrencies. Moreover, it looks like cryptoHODLers (a specialized term for those that tend to hold on to their Crypto assets) are now converting their less popular coins into the top 5 digital coins, including Bitcoin.
Trend 3: Lack of Interest in ICO Projects
A vast number of weak, and oftentimes fake, ICOs resulted in decreasing the overall value of newly released tokens, the quantity of releases, and the total amount of money raised to support ICOs.
What do the current trends tell us? Is there going to be a crypto crisis? Perhaps. However, keep in mind that a time of crisis is also a time of opportunity.
The current state of the market formed a new category of consumers, the so-called crypto HODLers (from crypto HODLing). Many small retail investors, who invested in cryptoprojects since the period of active growth in December of 2017, do not want to get rid of their purchases and thus lose their capital at the bottom of the market. This audience possesses a variety of digital assets and carefully follows news associated with the crypto market, waiting for the next wave of cryptocurrency growth.
Advice: Take a look at the new business segment that recently showed up in the crypto market: Crypto-Backed Loans.
One great example of a financial service being developed in the traditional financial markets during crises is microfinancing. The same has happened with the crypto industry. The current state of the crypto market gave birth to a new segment — namely microfinancing when cryptocurrencies are used as collateral.
The purpose of the aforementioned type of service is at the junction of traditional microfinancing and the pawnbroking business. An individual can take a loan in USD, EUR, or other fiat currencies by using his/her cryptocurrencies as collateral. As one of the slogans of the participants of the new market, the American platform SALT Lending, states:
«Get money without having to sell your favourite investment».
The funds that are obtained in fiat money obtained from«crypto-pawnshops» can be spent on needs that are not associated with digital assets. While crypto HODLers are waiting for prices to return to acceptable levels for a crypto sale, borrowed cash can be used for day-to-day activities. Crypto enthusiasts who actively follow the emergence of new tokens or the dynamics of long-existing digital coins can also use the obtained fiat money for buying additional crypto assets.
There are over 30 different crypto loan services that currently exist in the crypto market. We are going to review three of the most interesting ones.
THE MOST INTERESTING CRYPTO LOAN SERVICES
SALT Lending is an American company with headquarters in Denver, Colorado. The company began its work in December of 2017 and by August 2018 declared $50M worth of loans amongst more than 70K registered users. Bitcoin and Ethereum can be used as collateral. Loan-To-Value ratios vary from 30–50%.
To learn more, check out https://saltlending.com/
Nexo is a Swiss based service that offers loan amounts from $1K to $2M. The platform offers military-grade security with 256-bit encryption to its users. It partners with BitGo, an SEC-approved custodian, to secure the crypto assets. The company accepts Bitcoin and Ethereum, as well as its own tradable-on-crypto-exchanges token. The average Loan-To-Value ratio is 50 %.
To learn more, check out Nexo at https://nexo.io/
YouHodler is a new loan service platform that offers payments to be made via Debit/Credit cards. The platform accepts Bitcoin, Ethereum, Litecoin, Bitcoin Cash, Ripple, and other popular cryptocurrencies as collateral. YouHodler offers unbelievably high LTV (Loan-To-Value) — up to 80 % of the amount of debt can be issued by the company. The platform uses a Cyprus company, bank accounts in Switzerland, and its own investment fund.
To learn more, check out Nexo at https://youhodler.com/
Some of the active crypto-backed loan platforms offer opportunities for investors as well, offering returns that are comparable to or exceeding the returns of traditional microfinance businesses.
There are three main options to invest in these projects:
- P2P Model: Loans are given to a crypto HODLer directly.
Platforms such as the American company BlockFI (https://blockfi.com) offer such opportunities.
- Investing in the crypto-loan project by purchasing the crypto-backed loan service’s token: A great example of this is the Swiss company NEXO.io, which already offers its token on crypto exchanges.
- Investing directly in funds: Learn more about this opportunity by contacting YouHodler https://youhodler.com.