BlockFi Slashes Rates on BTC, Ether, LTC, LINK & PAXG for the Second Time This Year
In just over a month, the market conditions, heightened funding rates have pushed the company to lower the rates yet again instead of taking on more risk.
It’s been just over a month that the crypto lender slashed the interest rates on Bitcoin and Ether.
The rates haven't even been applicable for a month, and another hammer has been brought down on rates, yet again. This time, other crypto assets have also been roped in.
The changes that are to take effect from May 1st, BlockFi blamed the “shifting marketing condition” for the same.
While the last time Tier 1 was left untouched, the company tackled it this time. The only change for both BTC and Ether is in Tier 1.
Not only has the rate been dropped from 6% to 5%, the range at which it is applicable has also reduced to 0-0.5 BTC from 1 BTC, which was up to 2.5 BTC before the previous modifications. BTC -0.25% Bitcoin / USD BTCUSD $ 21,337.95
-$53.34-0.25% Volume 20.28 b Change -$53.34 Open $21,337.95 Circulating 19.08 m Market Cap 407.09 b 5 mon SEC Commissioner says NFTs Might Fall Within Their Jurisdiction, Gensler Hires Senate Aid for Crypto Policy 5 mon A Possible Crypto Recovery Moving Into New Year, Risk-on Sentiments Send The Stock Market to Another Record High 5 mon Bitcoin and Ether Dump More Going Into Year-End, ETH Killers Showing Great Momentum
As for Ether, while previously you can earn 5.25% on 0-100 ETH, now 4.5% is applicable to up to only 15 ETH. The rest of the Tier 1 ETH has been shifted to Tier 2, where 15-1000 ETH gives you 2% APY. ETH -1.05% Ethereum / USD ETHUSD $ 1,226.30
-$12.88-1.05% Volume 13.16 b Change -$12.88 Open $1,226.30 Circulating 121.32 m Market Cap 148.77 b 5 mon Coinbase Predicts Substantial Growth of Newer L1 Chains & Institutionalization of Regulated DeFi 5 mon A Possible Crypto Recovery Moving Into New Year, Risk-on Sentiments Send The Stock Market to Another Record High 5 mon The Sandbox Game Is Migrating to Ethereum Sidechain Polygon and Launching A DAO in 2022
At the end of March, when the last changes were first introduced, BTC was trading around $62k, and today it is around $55,000. During this period, ETH has soared from over $1,900 to $2,565.
Rates on all three other crypto assets Litecoin (LTC), Chainlink (LINK), and PAXG have been cut down by 1% for any amount above 0 to 6.5%, 5.5%, and 5% respectively. LTC -1.23% Litecoin / USD LTCUSD $ 58.29
-$0.72-1.23% Volume 461.05 m Change -$0.72 Open $58.29 Circulating 70.59 m Market Cap 4.11 b 6 mon Bitcoin and Ether Breaks Trend With Outflows While Altcoins Continue to See Inflows 6 mon SBI Holdings to Launch Japan’s First Crypto Fund; Including BTC, ETH, DOT, LINK, LTC, XRP & BCH 6 mon Ledger Announces Integration with FTX and Coinbase, Launching Crypto Life Debit Card PAXG 0.63% PAX Gold / USD PAXGUSD $ 1,836.03
$11.570.63% Volume 20.61 m Change $11.57 Open $1,836.03 Circulating 333.26 K Market Cap 611.87 m 6 mon SEBA Launches Regulated Gold Token Backed by Physical Precious Metal 9 mon BlockFi’s First Independent Director, Former CFTC Chair Chris Giancarlo, Quits Board After Just 4 Months 11 mon BlockFi Slashes Interest Rates Again, “Demand by Institutional Investors” Affects APY
“At BlockFi, we set rates by looking at where we can find compelling risk-adjusted returns with a minimal tolerance for loss,” said the company as an explanation.
Talking about the changes, BlockFi said it looks at the funding rates, payments made to traders who hold long and short positions on cryptos.
While the company was able to keep the interest rates high last year while funding rates were relatively low, as the price increased dramatically, the funding rate increased the size of the payments made on long positions.
These conditions derive from low demand to borrow BTC in a bull market since many market participants want to borrow USD to buy more BTC instead. After Bitcoin rose above $20,000 last year, demand for borrowing BTC gradually faded; hence the market rate fell, said BlockFi. It said,
“In order to maintain a healthy and sustainable lending/borrowing business model, we elected to lower our BTC yields instead of taking on more risk.”