As bitcoin begins another ascent upwards, competition among existing crypto lenders will continue apace. That means more innovation in lending products and offerings, as new market entrants from traditional finance and crypto look to take a piece of this high-demand industry as well as risks. Much of the market turmoil during the last bear market was caused by bankruptcies and business failures of overextended or otherwise shady crypto lenders.
This post is part of CoinDesk’s “Crypto 2024” predictions package. Mauricio is the co-founder of Ledn.
But the rebirth of the crypto lending market will also bring exciting opportunities for end users and investors alike, and drive continued changes to the digital lending ecosystem as we currently know it. Here are my seven key things to consider for the year ahead:
Beware the rise of overnight lenders
As more users enter the space, old and new companies alike will try to fill the void left by now-defunct crypto lenders like Genesis, Voyager, BlockFi and Celsius. They will try to sell customers the same promises of high returns with little transparency or risk management, as previous failed lenders did. There will be more fly-by-night opportunists trying to enter the market and trying to capture share.
As prices soar, don’t forget to ask the right questions! Was the lender able to navigate 2022 without hiccups? Are they “new” to the space? Investors should carefully understand how yield is generated, demand proof that the lender is accounting for client assets properly, and closely examine their risk management policies and track records. If you’re not getting clear disclosures or answers — beware!
Volumes will concentrate around regulated venues
Bitcoin [BTC] and ether [ETH] spot trading and derivatives volumes will shift from unregulated venues to regulated ones. Until now, a material share of the trading volume in crypto was processed through unregulated platforms that many times did not conduct KYC [know your customer checks] like decentralized exchanges and P2P markets. With the introduction of regulatory clarity and the emergence of spot bitcoin ETFs, a lot of this volume will now shift to regulated venues as traditional finance participants get the necessary clarity to become active in these markets.
See also: What’s All the Fuss…
Click Here to Read the Full Original Article at Cryptocurrencies Feed…
