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 -11.83% Bitcoin / USD BTCUSD $ 50,314.38
-$5,952.19-11.83% Volume 90.92 b Change -$5,952.19 Open $50,314.38 Circulating 18.71 m Market Cap 941.31 b 7 h Almost 90% Respondents Interested in their Insurance Products Having Links with BTC: Survey 8 h Bitcoin Car to Race at the 105th Indianapolis 500 to Support BTC Awareness and Open-Source Development 9 h CME Group Sees 'Strong Adoption' of Micro Bitcoin Futures
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 -6.38% Ethereum / USD ETHUSD $ 3,986.03
-$254.31-6.38% Volume 79.4 b Change -$254.31 Open $3,986.03 Circulating 115.85 m Market Cap 461.79 b 8 h Balancer Labs Launches V2 With Promises Lower Fees, Higher Yields, and Easy Interface 10 h Aave Is Testing Private Pools for Institutions to Ape into DeFi, Reveals CEO Stani Kulechov 11 h Bitwise Launches Crypto Industry Innovators ETF After a Green Light from the SEC
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 -15.63% Litecoin / USD LTCUSD $ 328.00
-$51.27-15.63% Volume 10.21 b Change -$51.27 Open $328.00 Circulating 66.75 m Market Cap 21.89 b 1 d Positive Momentum for Ethereum Continues with Another $60 Million in Inflows: CoinShares Report 1 d Tech Stocks Dragging Bitcoin, Ether, & Crypto's Down, But 'Fundamentals Still Strong' 6 d Ethereum Fork ETC Trading 12% Higher on Coinbase, CAKE Wicks Down Over 13.5% on Binance PAXG -1.47% PAX Gold / USD PAXGUSD $ 1,827.44
-$26.86-1.47% Volume 29.65 m Change -$26.86 Open $1,827.44 Circulating 60.16 K Market Cap 109.94 m 2 w BlockFi Slashes Rates on BTC, Ether, LTC, LINK & PAXG for the Second Time This Year
“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.”