Tough Luck of Celsius and Current Crypto Lending Opportunities   (2024)

The global turmoil caused by the recent geopolitical developments has spilled over to financial markets. The prolonged redness on stock exchanges has been getting on bulls’ nerves lately. Let’s face it: the crypto realm has found itself in dire straits as well. Bitcoin along with other cryptocurrencies have become frequent explorers of price charts bottoms amid the outburst of disappointing news. While waiting for the light at the end of the tunnel, we all need some solid solutions to stay afloat. Crypto loans can be an option for those who’d like to reap a benefit even in this situation.

How Do Crypto Loans Work?

Essentially, crypto loans work the same way as conventional loans. That is, you give a lender a collateral and get money. In our case, the collateral is a digital asset. The key difference from the traditional credit services is the lack of bureaucratic runaround. The beauty of DeFi is that it is not controlled by any state body which makes things easy indeed. In most cases, getting and paying off crypto loans is faster and more straightforward.

Crypto loans enable you to make profit from your crypto assets without selling them. Besides borrowing, you can also be a lender yourself and get interest for that. That is, instead of keeping BTC idle in your wallet, you can get passive income.

All in all, there are three participants in the crypto lending process: a borrower, a lender, and a lending platform serving as an intermediary.

When borrowing, you give your crypto as collateral and get fiat money or stablecoins as a loan. Suppose you have a certain amount of BTC and plan to hold it for dear life. But some circ*mstances arise where you need money, or you just want to buy more BTC. In such a case, you can get the needed asset in return for your crypto that can be bought back any time. By the way, this is one of the ways to benefit from a rising market.

When lending, you provide your fiat money or stablecoins in return for a cryptocurrency. Someone may wonder how it differs from simply buying crypto. First, you can get hold on your assets, giving back the crypto at the same price you took it. Second, you receive an annual interest rate. Opposite to crypto borrowing, it is a noteworthy strategy in a bearish market. For example, you lend 60,000 USDT and get 1 BTC for that. Anticipating a fall in BTC quotes, you first sell it but then buy again in, let’s say, a month at a lower price. As a result, you can close your loan and get back the initial amount of 60,000 USDT plus the price difference.

It won’t hurt reminding you that crypto loans just like any other crypto-associated activity involve certain financial risks. Specifically, if your collateral cryptocurrency is too volatile, it can be automatically sold upon reaching a certain price level. Another touchy subject is the reliability of a crypto lending platform. The Celsius case has proved the importance of thorough research and careful selection of a platform you are going to work with.

What Has Happened to Celsius?

Simply put, Celsius has overheated amid the continuous downtrend on the crypto market. Citing “the extreme market conditions”, the (once) leading crypto lender suspended withdrawals of customers’ funds in mid-June. The decision was announced on the company’s blog. It would be an exaggeration to state that such a move caused universal panic and mayhem, but it did made Bitcoin plunge to a new record low.

Allegedly, Celsius put too much effort at trying to get the best return out of clients’ money. Call it a coincidence, but the platform’s urge to act in the interest of clients by preserving assets came shortly after a collapse in stETH. There are rumors that Celsius is going through a liquidity crisis.

Let’s hope that Celsius will live through all the troubles and its clients will get their money back. Meanwhile, crypto lending services remain in high demand given the complicated conditions nowadays. With one of the biggest crypto lenders being temporary out of the scene, other worthy projects stand ready to fill the gap.

What Other Crypto Lending Solutions Are There?

Crypto loans seem to be a popular service with so many platforms providing it to meet high demand. In a great variety of offers, we have picked crypto loans by ChangeNOW, a non-custodial cryptocurrency exchange platform that has been on the market since 2017. For that time, it has earned the trust of over 4 million clients whose loyalty is proved by a high score on Trustpilot.

It would be wrong to call ChangeNOW a mere exchange platform though, because it is a full-scale crypto ecosystem that can provide you with any solution you can think of. Crypto loans is just one item in a wide array of ChangeNOW products comprising NOW Wallet, NOW Payments, NOWTracker, NOWNodes, and others.

A huge number of available digital assets (400+) makes ChangeNOW a perfect platform for swapping almost any popular cryptocurrency pair as well as some rare ones, while the choice of nearly 60 fiat currencies enables users to buy and sell crypto easily in most parts of the globe. Importantly, transactions are handled in 5 minutes on average, so the service is not only convenient, it is also fast and efficient.

Being a non-custodial service, ChangeNOW ensures the safety of clients’ funds which stay on their devices instead of being stored on the company’s server. It guarantees ultimate privacy and offsets possible negative implications of hacking risks.

Speaking of crypto loans, the guys at ChangeNOW have really thought through their offer, having described it in a crystal clear way. The first thing that captures attention is a 10% APR, one of the lowest rates on the market. It is fixed, so you know beforehand how much you will pay when releasing a loan regardless of market conditions. The term of a loan is unlimited, and you are free to close it at any time you want. There are also no limits on the maximum amount to be borrowed.

The process of getting a loan is straightforward. Basically, there are just three steps:

1. Choose a collateral crypto and a stablecoin you are borrowing (or vice versa).
2. Send your crypto to a specified wallet address.
3. Receive the loan to your wallet in 5-10 minutes on average.

As mentioned above, the greatest risk of a crypto loan is that a collateral can be sold automatically upon reaching a certain price level. ChangeNOW sets the price down limit at half of the current price. That is, the 50% loan-to-value ratio reduces the risk of your loan being liquidated under unfavorable market conditions.

ChangeNOW’s loan conditions are transparent and sustainable. If you deposit 1 BTC as collateral, you will buy back 1 BTC at the same rate no matter what the current price is. It is also a universal tool to hedge against exorbitant market volatility: ChangeNOW’s crypto loans prove to be efficient in both bullish and bearish market environments.

Bottom Line

Crypto loans provide ample opportunities indeed. You can get money for any purpose whatsoever and keep hold of your digital asset. It gives you a scope for action, as while maintaining your crypto as long-term investment, you are able to operate with free funds and seize some market opportunity. To make this best-case scenario work for you, be especially selective when picking a crypto lending platform.

Disclaimer: The presented material by no means represents any financial advice or solicitation. Be sure to do your own research and acknowledge the possible risks before using the service of any cryptocurrency platform.

Comments