{"id":465635,"date":"2022-06-20T13:11:55","date_gmt":"2022-06-20T10:11:55","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/crypto-lending-can-still-survive-bear-market-analyst-says\/"},"modified":"2022-06-20T13:11:55","modified_gmt":"2022-06-20T10:11:55","slug":"crypto-lending-can-still-survive-bear-market-analyst-says","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/crypto-lending-can-still-survive-bear-market-analyst-says\/","title":{"rendered":"# Crypto lending can still survive bear market, analyst says"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a393c9423586\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a393c9423586\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/crypto-lending-can-still-survive-bear-market-analyst-says\/#%E2%80%9D_Crypto_lending_can_still_survive_bear_market_analyst_says_%E2%80%9C\" >&#8221; Crypto lending can still survive bear market, analyst says &#8220;<\/a><\/li><\/ul><\/nav><\/div>\n<h1><span class=\"ez-toc-section\" id=\"%E2%80%9D_Crypto_lending_can_still_survive_bear_market_analyst_says_%E2%80%9C\"><\/span>&#8221; Crypto lending can still survive bear market, analyst says &#8220;<span class=\"ez-toc-section-end\"><\/span><\/h1>\n<p><img decoding=\"async\" src=\"https:\/\/images.cointelegraph.com\/images\/840_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjItMDYvMGMxNWZlNDEtY2QyMi00OWVlLTk0MjctNWMxOTg5MzgyYjNjLmpwZw==.jpg\" \/><\/p>\n<div class=\"post-content\" data-v-2a0745c6>The ongoing bear market on cryptocurrency markets is too harmful to industry lenders but the concept of crypto lending can still survive the bloodbath, according to some industry experts.<\/p>\n<p>Cryptocurrency lending is a type of crypto services allowing borrowers to use their crypto assets as collateral to get loans in fiat currencies like the U.S. dollar or stablecoins like Tether (USDT). The practice allows users to get money without having to sell their coins and repay the loan at a later date.<\/p>\n<p>According to Josef T\u011btek, Bitcoin (BTC) analyst at the crypto cold wallet firm Trezor, crypto firms that run their business on a fractional-reserve basis are exposed to greater risks during bear markets.<\/p>\n<p>In traditional banking, the fractional-reserve model is a system where only a fraction of deposits are backed by actual cash. Crypto lending companies are \u201cdefinitely running a fractional-reserve business\u201d to provide yields to their customers, according to T\u011btek.<\/p>\n<p>\u201cExchanges and custodians that run on a fractional-reserve model are playing with fire. This practice may work fine during bull markets when such companies experience net inflows and grow their customer base,\u201d the executive stated.<\/p>\n<p>According to T\u011btek, sharp declines in cryptocurrency prices are more bearable for crypto businesses that do not provide lending services and do not leverage users\u2019 deposits. This allows them to survive the domino effect of falling prices and companies going under.<\/p>\n<p>\u201cIf you throw in leverage \u2014 trading with borrowed funds \u2014 the losses are often much more painful, especially with sudden price moves,\u201d T\u011btek noted.<\/p>\n<p>In order to survive the ongoing crypto lending crisis, cryptocurrency lenders need to solve a major issue related to short-term assets and short-term liabilities, the analyst argued, stating:<\/p>\n<blockquote><p>\u201cCrypto lending as a concept can survive this crisis, but the sector needs to get rid of the maturity mismatch problem: if someone else borrowed my assets and I get a yield as a return, then I have to wait for the borrower to repay before I can withdraw.\u201d<\/p><\/blockquote>\n<p>T\u011btek went on to say that liquidity issues are inevitable for lenders that promise full liquidity on assets that are lent out at the same time.<\/p>\n<p>\u201cEvery participant needs to respect the risks involved and the fact that there are no bailouts in the space, so if a borrower fails to repay, a lender has to accept their loss. There is no risk-free yield, and often the yield is not worth the risks,\u201d he added.<\/p>\n<p><strong><em>Related: <\/em><\/strong><strong><em>Celsius recovery plan proposed amid community-led short-squeeze attempt<\/em><\/strong><\/p>\n<p>The crypto lending industry has been facing one of its biggest historical crises amid cryptocurrency prices dropping to 2020 levels, with the total market cap shrinking more than $1 trillion since the beginning of the year.<\/p>\n<p>Celsius, a major global crypto lending platform, suspended all withdrawals on its platform on June 13, citing \u201cextreme market conditions\u201d as its native CEL token lost about 50% of its value. Hong Kong-based asset manager and crypto lender Babel Finance also temporarily suspended redemptions and withdrawals from its products on June 17 due to \u201cunusual liquidity pressures.\u201d<\/p>\n<p><template data-name=\"subscription_form\" data-type=\"markets_outlook\"><\/template><\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/crypto-lending-can-still-survive-bear-market-analyst-says\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8221; Crypto lending can still survive bear market, analyst says &#8220; The ongoing bear market on cryptocurrency markets is too harmful to industry lenders but the concept of crypto lending can still survive the bloodbath, according to some industry experts. Cryptocurrency lending is a type of crypto services allowing borrowers to use their crypto assets&#8230;<\/p>\n","protected":false},"author":1,"featured_media":465636,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.cointelegraph.com\/images\/1200_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjItMDYvMGMxNWZlNDEtY2QyMi00OWVlLTk0MjctNWMxOTg5MzgyYjNjLmpwZw==.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[74937,74863,77595,74355,117,70934],"class_list":["post-465635","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-bitcoin-price","tag-cryptocurrencies","tag-lending","tag-adoption","tag-business","tag-regulation"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/465635","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=465635"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/465635\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/465636"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=465635"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=465635"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=465635"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}