Cryptocurrency lending firm BlockFi has announced an update to their interest rates for Bitcoin and Ethereum, with the latter experiencing a severe cutback.
According to the monthly update published on May 21, BlockFi reports that the month has been “fantastic” for the crypto ecosystem, and predicts the bear cycle is likely reaching its end. The company highlights the thousands of fans, traders and entrepreneurs who attended the 2019 Blockchain Week held in New York City as a testament to the industry’s growth. In addition, BlockFi reports that that their interest account now commands over $100 million in digital assets being managed, marking a substantial milestone for the financial product since its launch earlier this year.
Last week BlockFi published an article outlining the market forces driving their ability to lend cryptocurrency and the metrics they use for generating interest rate returns. Citing that guideline, the lending company reports that the demand for Bitcoin borrowing and lending has been on the rise, describing it as a “vibrant and growing field.” However, BlockFi claims that interest in Ethereum, in terms of the market for loaning ETH, has been lackluster in comparison and points to other cryptocurrency lending platforms who have drastically scaled back on the market for Ether,
“Ether lending market over the last couple quarters has become as stagnant as we’ve ever seen it. According to the Q1 report put out by Genesis Capital last month, just 3% of their overall loan portfolio is in ETH. Additionally, platforms like Poloniex and Compound are offering borrowing rates on ETH as low at 0.01%.”
As a result of falling market demand in Ether borrowing, BlockFi has announced a slashing of the Ethereum interest rate, while providing a slight bump in BTC. According to the new guidelines found in the official post:
- BTC Balances above 25 BTC will earn 2.15% interest (up from 2% previously). All balances between 0.5 BTC and 25 BTC will continue to earn 6.2% Annual Percentage Yield (APY)
- ETH Deposits between 25 ETH and 100 ETH will change from 6.2% to 3.25% APY. Balances above 100 ETH will earn 0.2% APY
BlockFi’s announcement comes as a disappointing setback for Ethereum investors who were hoping to make secure and somewhat guaranteed annual returns on their coins. While the crypto markets throughout 2019 have produced 105 percent and 86 percent returns for Bitcoin and Ethereum, respectively, BlockFi provides an additional boost in ROI for investors not looking to cash their coins in any time soon. Instead, crypto investors are able to lend to would-be borrowers through BlockFi, as opposed to keeping their currency dormant in wallets or exchanges.
BlockFi’s monthly dispatch also reports updates coming to their dashboard in the next few days. Including the ability to view interest earned to date, total account balance in USD, and calculators forecasting potential earnings. BlockFi utilizes Gemini for its custodial services in storing and securing client cryptocurrency.
