Jan 14, · Such endeavor can be quite profitable, seeing as lending capital via digital currencies can generate a much higher interest rate in comparison to bank accounts. The Lending Mechanism The lending cryptocurrency-based mechanism is based on the same idea as with fiat currencies, instead, you loan Bitcoin or other cryptos. Oct 24, · Bitcoin lending for margin trading As we previously analyzed, margin trading can be a very profitable strategy when fully understood. However, there is a more conservative, low-risk process called margin lending. Exchanges like Bitfinex propose this 24crypto.de: Ivan Djordjevic. Diversification your Bitcoin loans may come with a result of a high profitable loans for and your funds will not be in a one “egg basket” Last and most important is that you as a lender should be carrying out your due diligence.
Bitcoin lending profitableHow to Earn Money with Bitcoin & Cryptocurrency Lending
Similarly, there are numerous safeguards put into place here as well, to ensure that funds remain safe in spite of wrong trading calls. LendingBlock is a new platform for Cryptocurrency Loans. Because of this, the general consensus is that cryptocurrency lending for margin trading purposes is quite safe. This is a general principle that should be applied to all investment decisions, regardless of the currency or method being used.
Considering everything that has been outlined so far, making a profit is surely possible. However, there are a couple of aspects that need to be kept in mind, to further increase profit margins, while also reducing risks.
For instance, it is recommended that you do not lend at bottom rates and for long time-frames. This will put your funds on hold, and if bigger opportunities arise, you will be missing out.
In other words, most lenders wish to lend out their crypto via a long duration contract for a premium price, and such opportunities will arrive granted patience is practiced.
This is the current trend, as funding long term contracts for a low price can be a bad decision, given the fact that rates often spike, thus leading to lenders missing out. Read our guide to making money with Bitcoin post for more ideas. Spreading your loans is also recommended. Lending out all of your cryptocurrency at a single rate can work, but it increases risks and lowers chances for higher profits. By dividing loans into blocks and lending them out at higher prices, and at different moments, lenders can further increase their profit margins.
Last but not least, one of the most essential tips would be carrying out your due diligence. This means that as a lender, you are responsible with carefully assessing the market, reading the terms and conditions, understanding the risks, following reviews and insights posted by other lenders and more.
In return, this will increase your understanding of how the crypto lending market works, while also efficiently increasing your profit. At this moment in time, there are numerous lending platforms available on the market, all of which have their subtle differences. We have written guides to some of these platforms as follows:. It is also a popular alternative for people who are interested in crypto and trading, yet do not have enough time for running a profitable day trading practice.
Daniel Dob is a published author and digital currency journalist, with over 7 years of writing experience. His main niches are cryptocurrencies, business, fintech, internet marketing, and finance.
When he's not writing, you can find him reading, traveling, or taking one of his hobbies to the next level. Contact danielzoarticles gmail. Hi Daniel, may I know what is the current market scope of cryptocurrency lending? Any official report on that? Margin trading is essentially putting up funds to be lent to other traders. When you put funds up for trading, you have the freedom to choose the amount, interest, and time allotted to pay it back. Then, when someone borrows from you, they trade your funds for a profit and pay you back with interest.
It is possible to put up a few different currencies including both fiat and cryptocurrencies, and the interest you amount will be paid back in that particular currency, be it Bitcoin or USD. There are two major exchanges that offer universal lending services, Bitfinex and Poloniex. It will pay to familiarise yourself with the exchanges as companies as well as their lending service to make the most informed decision. The process and profit of each exchange are pretty similar but there a few subtle differences to keep an eye out for.
One of the cool things about the lending platforms on Bitfinex and Poloniex is the way they let you manage your own lending structures. This means that you can choose whether you want to have your funds paid back fast, or over a period of time, how much interest, and how much the initial loan is.
Compare platforms: Kraken vs Poloniex Comparison. This means you can experiment with different lending plans to see which will reap the most return. And, once you settle on a lending structure that works for you, you can set it up on auto-renew. Meaning it will automatically renew as many times as you like. When offering funds for lending, you can offer your own interest rates, but the average daily rates on both platforms tend to be around the 0.
Especially if you are keeping an eye on the market and strategically lending during a spike in the market. During these spikes, you can attract borrowers willing to pay even higher rates in order to get their share. Platform Comparison: Bitfinex vs Bittrex. Both exchanges, however, charge fees on every loan for facilitating the exchange.
For example, if you lend 10, on a daily auto-renew plan, and charge 0.