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Bitcoin is doing very well as of late. At the time of writing, the currency has jumped even higher and is now trading for just shy of $9,500. Perhaps the coin will hit $10,000 in the coming weeks…
Bitcoin Is a King, but Cash Is Still a God
But according to one source, bitcoin still doesn’t have the attention or the respect of cash. While this is to be expected – bitcoin is, after all, only about ten years old – cash still dominates the loan space. This is also to be expected, considering bitcoin and cryptocurrencies tend to be volatile. Granted the coins that the loans are based on move up in price, the person who took out the loan may wind up owing more than what they originally tried for.
This process also works in reverse. If the coins go down, the loan may become diminished and the lender can potentially lose out on what they were originally owed.
According to a report from New York-based Genesis Capital, cash still serves as the basis of most loans in the United States and abroad. In addition, the venture is noticing that more and more individuals and companies are looking to take out such loans. For example, during the final three months of 2019, Genesis states that the company’s active loan portfolio made up approximately 37 percent of its active lending and revenue.
This is considerably better than its third quarter figure of 31 percent, and even more solid than the ending figures of 2018 (14 percent). While bitcoin loans were relatively solid in 2018 at an even 63 percent, they dropped significantly the following year to 47 percent.
This is odd considering that around the time of the currency’s “loan height,” the price of bitcoin was suffering, whereas 47 percent was struck at a time when the currency was peaking (around $13,000 in mid-July).
Perhaps the dilemma came with the idea that taking out a bitcoin loan when the currency was at a low point would somehow require clients to pay less should these price drops continue.
Genesis Capital executive officer Michael Moro explained in an interview:
We are trading at 50 percent of the bitcoin all-time high right now, so people are still saying that they are weary, but I guarantee the narrative changes dramatically when the price is back up.
Futures Are Making a Huge Difference
As it stands, where bitcoin is making the most headway is in futures trading. Bakkt has been breaking all sorts of trading records since the end of 2019, while CME Group – which is still relatively new to the BTC trading arena – is also outdoing itself and is widely considered one of the reasons bitcoin has been on such a roll since the beginning of the year.
Genesis Capital unveiled its crypto lending department in early 2018.