BlockFi Slashes Interest Rates Again, “Demand by Institutional Investors” Affects APY

While rates in the crypto lending market are at lower levels than prior quarters, the firm is “optimistic” that yield will increase in the coming months.


Once again, crypto lender BlockFi has reduced interest rates on cryptocurrency holdings.

BlockFi has already cut down the rates twice, in mid March and late April. Yet again, it seems they can’t keep offering clients good rates and are slowly coming down to the traditional financial institutions' levels.

On Friday, the firm announced new rates and tiers that will go into effect on July 1 for Bitcoin (BTC), Ether (ETH), Chainlink (LINK), Litecoin (LTC), PAX Gold (PAXG), Gemini Dollar (GUSD), Binance USD (BUSD), USD-backed Stablecoins, and Tether (USDT) which is only available to non-US retail clients.

For Bitcoin, up to 0.25 BTC, down from 0.5 BTC, now has a 1% lower APY of 4%, the rate has decreased 0.5% to 1.5% on the second tier, which now involves 0.25-0.5 BTC, which was previously 0.5-20 BTC, and tier third only offers 0.25% interest on more than 5 BTC.

On Ether holding, the rate is the same as Bitcoin’s three tiers which involve up to 5 ETH down from 15 ETH for tier first, between 15 to 50 ETH now belong to the second tier, which used to have 15 to 1000 ETH, and tier 3 is now 50 ETH and above while it was previously over 1,000 ETH.

For Chainlink, Litecoin, Pax Gold, and dollar-based stablecoin, a new tier is introduced, offering 0.5% APY for LINK and PAXG and 2% for LTC while 5% for stablecoins. APY is reduced between 1-2% on tier 1, which has been limited to 750 LINK, 100 LTC, 5 PAXG, and 50,000 units for stablecoins.

BlockFi said it sets rates for the BlockFi Interest Account (BIA) by balancing prudent risk management principles amid shifting market conditions. These rates are primarily driven by the demand by institutional investors for borrowing these assets, they added.

Despite the positive news regarding MicroStrategy continuing to buy more BTC, El Salvador became the first country to adopt bitcoin as a legal tender, and Tesla says it will accept Bitcoin transactions, there is a lot of volatility in the market.

While BTC price is hovering in the low $30k range, rates in the crypto lending market are at lower levels than we have in prior quarters; as such, the company elected to update their rates to reflect current market conditions, it said.

As we reported, with price action on the bearish side and leveraged traders nuked, funding rates in the market have gone negative, and yields have been compressing across the market.

While this rate change isn’t welcome news, BlockFi said, in the medium term, they remain “optimistic that we may see yield increases in the coming months as crypto hedging activity picks up.”

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