Who and Why Borrow Bitcoin?

[MrMuppet]

thing is those returns talked about are very high, so someone gotta be paying for that, I can't think of why would someone legit be paying 2-digit yield to borrow tokens

I bet a lot of the monkeys here on ET do that without even knowing. It's called margin lending and when you borrow a hard to borrow highflyer, you bet you'll pay double digit returns.
Guess what the stock owner gets? Right, nothing. Compare that to Celsius where the stock (crypto) owner at least gets breadcrumps.

To anyone who is suspícious of high rates despite the low risk free rate:

Those two have nothing to do with each other. You can very well offer 15% p.a. when the bull market is pumping and carry pays 30%. The difference is that in a bull market the business works like commercial banking. Because you can hedge your interest rates in the open market, you don't have a duration mismatch. You borrow for 10% fixed term 6 months and hedge your epxosure right away with futures, same term, at 28%.

But now that the carry is basically nonexistent, you should lower your rates to a point where you know that margin traders will pay above your borrowing rate...which they did not. And they wanted to sit it out...and then the defaults came.

There isn't an active interest rate swap market in crypto yet. If there was, that could have been used to hedge the duration mismatch

 

[johnarb]

This is basically what happened to Celsius...and by the way duration mismatch was the number one factor every single investment bank either took a government bailout, got gobbled up by competition or went bankrupt during the GFC in 2008.

Thank you very much!!

I was confused why Celsius was bankrupt I thought they are over-collateralized (although I think they mentioned they accept less than 100% from established firms)

Duration mismatch is equivalent of bank run in Crypto Assets banks like Celsius and BlockFi(?)

TradFi and cryptos just not compatible for this borrow/lend setup

Retail depositors of crypto assets expect to withdraw their cryptos 24/7/365 but TradFi borrowers like Sequoia operate on banking hours. Celsius has no choice but to halt cryptos withdrawals

 

[MrMuppet]

Thank you very much!!

although I think they mentioned they accept less than 100% from established firms

That was their actual problem. Well established doesn't mean invincible

 

[JackMorgan]

btc was borrowed by the whales shorting it into oblivion.

They needed suckers to stake , so they could pay them 10% and make 50% on billions on borrowed garbage. its like borrowing a bad stonk and willing to pay 500% to do it .

I told you all this long ago

The btc bulls here are useless, as expected

 

[The_Krakenite]

So you told us long ago. But you still haven't told us how many millions you've made shorting it all this time.

You must be close to a quarter billion now... When are you planning to cover?

 

[Overnight]

btc was borrowed by the whales shorting it into oblivion.

They needed suckers to stake , so they could pay them 10% and make 50% on billions on borrowed garbage. its like borrowing a bad stonk and willing to pay 500% to do it .

I told you all this long ago

The btc bulls here are useless, as expected

How long ago did you tell us this? I don't recall seeing you make much mention of BTC.

 

[JackMorgan]

How long ago did you tell us this? I don't recall seeing you make much mention of BTC.

lol, funny. and blocked ! bye

 

[Overnight]

lol, funny. and blocked ! bye

You do not do a good job of blocking.

You will not truly block me, because I entertain you too much. With this you cannot disagree.

 

[virtusa]

So you told us long ago. But you still haven't told us how many millions you've made shorting it all this time.

You must be close to a quarter billion now... When are you planning to cover?

You apparently do not have enough intelligence to understand that people who don't believe in crypto's are not by definition going to short it. Crypto's are scams, and intelligent people stay away from scams, in both ways, long and short.

I told also years ago that crypto's are scams. I traded something else that made me more money then shorting crypto's would have given. Always in relation to the risk/reward ratio that is much more favorable for me..

Risk/reward ratio is something that crypto fans don't know. They only see the upside moves and never the downside moves of crypto's.

We can ask you the same question: Are you already a billionaire?

 

[The_Krakenite]

I traded something else that made me more money then shorting crypto's would have given.

That seems like quite a story to tell...