The lending of cryptocurrencies has been an interesting sector to observe over the past year as new products have proliferated in the market. Volatility has always been an active contributor to lending rates, and with the recent spike in volatility, lending rates on crypto exchanges have reached as high as 149% p/a on some cryptoassets (e.g. NEO), with rates even as high as 38% p/a earnable on USD. These developments create the opportune moment to explore margin lending products.

Margin lending has been a popular service offered by traditional stockbrokers for decades. It is a process whereby brokers lend either securities or cash to their clients for trading purposes. Lending rates offered by traditional brokers (e.g Charles Schwarb) typically vary between 5.5% to 11% depending on the broker and the loan value.

For brokers, lending is a wonderfully profitable business. Given that Charles Schwarb only pays a paltry 0.18% on their high yield savings product, it is no wonder that 57% of their revenue comes from net interest income (i.e. lending interest earnings after deducting interest paid to account holders) according to their 2018 10-K SEC filing. Despite the fact that they are a broker and not a bank, only 40% of their revenue comes from asset management and trading fees.

Blockchain technology has become synonymous with the democratization of financial opportunity; this is also true in the margin lending space as anyone is able to lend out their cryptoassets and earn the rates that brokers and institutions have been enjoying for years. Platforms such as Celsius, Nexo and Invictus Capital have enabled interest revenues to be passed directly on to the retail audience at interest rates that are, in some instances, 10x what is available in the traditional market.

Sources: Earncryptointerest.com; Loanscan.io, Fidelity.com

The development of cryptocurrency lending platforms can largely be attributed to the maturation of cryptocurrency market post 2017. The latest report by Credmark, a cryptocurrency credit bureau, highlights that the lending market has expanded to over $6.4bn in loans originated by Q3 2019. This is up from a mere few hundred million just a few years before. Additionally, the lending market is experiencing quarter on quarter growth of 497 in new loans originated.

In the cryptocurrency sector, the lending market mainly functions with a few significant participants, namely miners, traders, high net worth individuals, and institutions. The most significant driver of demand for loans (especially loans provided via margin lending), is from traders.

Most of the large cryptocurrency exchanges facilitate some form of margin trading on their platforms. Some exchanges such as Bitfinex and Poloniex, however, enable peer to peer lending using a matching engine to bring liquidity providers and traders together. Exchange lending volumes are growing as traders seeking quick, affordable liquidity options and lenders look for attractive returns.

Cryptocurrency volatility is the key driver of margin lending volume growth since higher volatility motivates more trading activity.

Spikes in lending rates often correlate to bitcoin price swings as traders look to increase their market exposure. As an example, the 30% surge in the bitcoin price on the 25th of October 2019 caused a corresponding surge in the USD lending rates, with annualized rates escalating as high as 20% pa during the month.

While the USD lending rates track the volatility of the crypto market, USD margin lending does not expose trading capital to price fluctuations of the underlying crypto market. In addition to no capital drawdown risks, margin lending returns provide diversification benefits.

Introducing the Invictus Margin Lending Fund

Invictus Capital has a distinguished track history within the cryptoasset space with the launch of index funds CRYPTO20, Crypto10 Hedged and Hyperion, (a blockchain VC fund). Invictus has further developed an innovative margin lending fund to allow investors to earn passive, high-yield dollar-based returns. The Invictus Margin Lending Fund (IML) offers investors a unique opportunity to take advantage of a nascent market that has to date provided consistent returns well above traditional money market yields.

With the current best US short term savings rate at 2% APY, the IML fund provides a unique opportunity to earn yields in excess of 10%.

Along with returns, the fund also has compelling structural benefits, including 24/7 liquidity through automated smart contract subscriptions and redemptions. Investors are able to redeem their tokens for TUSD (the operational currency of the fund) as and when they wish to realize returns.

With the continued growth of the lending market, and increasing buy-side demand it is expected that USD lending returns, and thus the returns of the IML fund will continue to remain impressive. https://invictuscapital.com/imlFund

This is a submitted sponsored story. CCN urges readers to conduct their own research with due diligence into the company, product or service mentioned in the content above.

Last modified: January 23, 2020 7:20 AM UTC

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Margin Lending: Earn the Best Interest Rates in the Cryptocurrency Lending Market - CCN.com

In the latest episode of the Joe Rogan Experience, the popular podcaster riffs on the surveillance state and why crypto and Bitcoin make him nervous.

Speaking with ex-CIA cover operations officer Mike Baker, president of Diligence, a global intelligence and security firm, Rogan calls out the big data grab by the National Security Agency (NSA) collecting everybodys personal information, from phone calls to text messages.

Baker calls Amazon, Google and your Samsung TV bigger surveillance threats than the NSA, given the ability of ubiquitous consumer devices to watch people in the comfort of their living rooms through embedded cameras or to listen to voice commands and other communications through microphones.

Its the commercial side thats collecting information not necessarily for nefarious purposes. Theyre collecting it for marketing purposes to make more money, which is what theyre in business to do. Theyre the ones hoovering up data that then leaks out because somebody hacks, grabs all that information, and then they use it for something nefarious.

Rogan pinpoints the type of new digital trends he finds worrisome.

Well, I get nervous when I hear about companies like Facebook that are thinking about starting their own cryptocurrency. Im like whoa, whoa, whoa, whoa. Are you going to have your own money now?

Im not a not-believer [in Bitcoin] but Im not invested in it. I had a guy on several times, Andreas Antonopoulos, whos a big Bitcoin expert very, very bright and interesting guy and I really enjoyed talking to him about it. But hes all in. He does all his banking with Bitcoin, pays his rent with Bitcoin, gets paid with Bitcoin, everything is Bitcoin with him. And hes loved by the Bitcoin community and all this different stuff.

But, at the end of the day, I just dont totally understand how you can have so many of them. Like how many cryptocurrencies are there, and if you dont have so many of them, well whos to say when you can stop making them?

Baker is similarly puzzled by the concept of decentralization and how the system can operate without some authority that is in control or without traditional forms of backing by a government or a commodity. Essentially, the computer science and math behind it is illusory. He says he falls under the category of not understanding Bitcoin because he hasnt taken the time to dig deep. Rogan counters,

You cant. You dont have enough time to think about everything. So Im letting that one play out on its own. Im just going to sit back, and when its 100% and everybody is like Look, Bitcoin is just like money ok, but until then.

They kind of predicted it was going to be just like money a few years, and it never really did hit that. But you can buy some things with Bitcoin. Theres some companies that let you buy computers with Bitcoin.

Baker says he buys gold. He also cops to wearing a blingy chain back in the day though not too chunky. Adds Rogan,

Gold is real. Theyve been killing people for gold forever. Its legit shit.

Despite gold being the real deal, Rogan questions why people are still so attached to it considering the tsunami of stuff on the planet.

I dont even like it as jewelry. I think its kinda tacky.

Featured Image: Shutterstock/igorstevanovic

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Heres Why Joe Rogan Is Not Convinced on Cryptocurrency and Bitcoin (BTC) - The Daily Hodl

Bitcoin is looking to repeat a technical pattern that crashed its price to $3,120 in late 2018.

The leading cryptocurrency by valuation made a rebound from levels near $13,920 during June 2019. It plunged by more than 53 percent in the later sessions, falling to establish a local bottom towards $6,410. Entering January 2020, an upside recovery pushed bitcoins rate to a swing top of $9,190.

The latest move uphill improved the cryptocurrencys interim bullish bias. Analysts predicted further gains, expecting that investors would consider bitcoin as a haven against gloomy macroeconomic sentiments, including the Federal Reserves injection of $500 billion into the repo market that could raise demand for hedging assets.

Nevertheless, a dreaded technical indicator is giving an alarming view of the bitcoin market. It shows that the cryptocurrencys recent gains are a part of a more prominent drop that may come later and crash the price to as low as $2,300.

So it appears, the bitcoins latest price cycle is strikingly similar to the one it formed upon establishing circa $20,000 as its all-time high.

Cycle 1 in the chart below shows the price corrected wildly upon the top formation. It made lower highs on each move upward while maintaining the long-term selling outlook. As it did, bitcoin also formed a Death Cross when its long-term moving average (blacked) closed below its near-term moving average (blued).

Bitcoin mirroring its bearish moves of 2018 in 2020 | Source: TradingView.com, BitMEX

The cryptocurrency later struggled to move above the blued wave. And the more the price stayed below it, the higher the selling sentiment grew. Nine months after the formation of the Death Cross, the bitcoin-to-dollar exchange rate had totaled it plunge by 83.78 percent.

Cycle 2 appears like a dwarfed version of Cycle 1. Bitcoin is forming lower highs after forming a local top. Its move downward has remade the Death Cross. And, at last, the price is struggling to break above the blued wave the long-term moving average as is visible in bulls latest efforts.

The two widely distanced yet identical cycles serves a warning sign: Bitcoins downtrend is far from over and its price could at least plunged by 83 percent. That would bring the bears downside target close to circa $2,300.

Observing bitcoin on a larger timeframe, such as a weekly one, improves the cryptocurrencys bullish scenario. As covered by NewsBTC earlier, the price has jumped above its 50-weekly MA (blacked), a bias-defining technical support/resistance.

Bitcoin closed above 200-weekly SMA to confirm a long-term bullish bias | Source: TradingView.com, Coinbase

Meanwhile, on the daily chart, defending the same 50-period support could reduce the possibility of a breakdown towards $2,300.

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Bitcoin Indicator that Crashed Price to $3.1K Returns: The Dreaded Death Cross - newsBTC

Bitcoin entered a negative slope on Thursday as traders took profits from its latest price rally. But the cryptocurrency remained above a strong technical support level.

Spot BTC/USD exchange rate was down 3.84 percent at $8,360.87 ahead of the New York morning session open. At the same time, bitcoin futures listed on CME fell by more than 6 percent. to $8,385.

The downside move followed bitcoins massive price rally at the beginning of this year. As of January 13, the cryptocurrency had jumped by 43 percent from its local bottom of $6,430, established in December last year. Part of those gains came after an escalation in US-Iran tensions raised investors appetite for haven assets.

Bitcoin climbed to its near-two-month peak of $9,194.99 on January 13 but failed to move any further as the said geopolitical tensions cooled off. Investors preferred to book profits, which resulted in the bearish correction that is currently in play.

Bitcoins dip also came at the time when investors were awaiting the outcome of the European Central Banks (ECB) monetary policy. The bank left its policy unchanged, putting a hold on rate cuts after noticing stabilization in growth in Eurozone, as well as overseas after the phase one deal agreement between the US and China.

That left the global stock market in flat range, which was yesterday in red owing to a Coronavirus epidemic in China. Traders remained anxious over a potential health crisis, which led Chinese stocks to register their biggest decline in the last eight months. Futures on Wall Street lowered, with the S&P 500 declining by 0.1 percent.

The cautious sentiment helped Gold in limiting its decline as investors remained half-dipped in safe-haven assets. Bitcoin, whose correlation to Gold increased since the beginning of the US-Iran crisis, also observed technical supports to safeguard its bullish bias.

The BTC/USD exchange rate now looks biased to retest support at circa $8,200-$8,300, a range it observed as resistance during the May-June trade session last year. Nevertheless, the absence of interim fundamentals supports an extensive fall towards $7,800, which coincides with bitcoins 200-weekly moving average wave (blacked).

Bitcoin risks fall but hold above $8.2K support | Source: TradingView.com, Coinbase

A further break below brings bitcoin inside the Descending Channel pattern, which risks a plunge towards $6,420 the local bottom as of now.

Meanwhile, apullback from the 200-MA or before could have bitcoin close in on $10,000 as a primary upside target. The level has served as solid support for the cryptocurrency.

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Bitcoin Plunges on Profit-taking, Losses Limited by Coronavirus Outbreak - newsBTC

More than US$11 billion has been stolen from supposedly secure crypto exchanges, wallets and mining platforms since 2011, mostly due to hacking incidents, research from Inside Bitcoins has revealed.

For a form of currency that bases itself on safety and security, $11 billion is a pretty significant number. Stored on blockchain technology and protected by encryption keys, cryptocurrencies are supposed to be impossible to counterfeit or copy.

In fact, the currency is so secure that when the co-founder and chief of Canadian exchange QuadringaCXGerald Cotten died last year, it transpired he was the only one with the digital keys to the digital safe where all the coins were kept.

Since then, there have been questions as to whether or not Cotton actually died at all. Lawyers for Quadringas investors have even called for his body to be exhumed in order to settle the matter once and for all.

However, it turns out even crypto coins can be half-inched. According to US bitcoin publication Inside Bitcoins, there have been some 33 hacking incidents, globally, since 2011.

The exchange that fell victim to the first reported crypto hack in 2011 was also on the sharp end of the biggest hack in 2014.

In 2011, Tokyo exchange Mt.Gox was breached, losing about US$17.2 million in bitcoin.

It recovered from the incident, and by 2014, it was the leading exchange in the world, managing about 70% of all bitcoin transactions.

In February 2014, however, it suffered a second attack, losing about US$6.5 billion worth of bitcoin or six percent of all bitcoin in existence at the time.

Three years later, Mt.Gox was bankrupt.

The Mt.Gox hack of 2014 is now infamous its the subject of lengthy deep-dive articles, its explored in many tech podcasts and its even the subject of an ebook.

Three additional hacks were recorded in 2014, bringing the total loss to US$6.7 billion, and making the year an almost comical standout on a graph detailing losses over the past eight years.

By contrast, the second most-catastrophic year was 2016, which saw total losses of US$1.6 billion in cryptocurrency.

Interestingly, 2017 saw an increase in the number of hacks, but a dip in the value stolen. Its perhaps no surprise that there was more criminal interest this was the year of the crypto-boom, in which prices reached a peak of US$20,000.

However, the most hacks occurred in 2019, including that of prominent exchange Binance, which lost about US$60.5 million in bitcoin.

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Hackers have got their hands on $11 billion in stolen cryptocurrency since 2011 - SmartCompany.com.au

Source: iStock/UlyssePixel

Uzbekistans president has produced a draft decree that will see tax authorities in the country waive taxes on cryptocurrency trading and transactions for both Uzbeks and non-nationals living in the country.

As previously reported, the government has been keen to implement the new measures as well as new mining regulations since the turn of the year.

However, according to a document posted on the governments official website, the draft decree could be implemented as early as February, with a consultation period set to end at the end of this month.

The decree is entitled Measures for the further development of the circulation of [cryptocurrencies] in Uzbekistan.

Under the terms of the decree, crypto transactions would also be free from the kind of restrictions usually placed on foreign currencies.

The decree also contains further details of a proposed national mining pool, which will allow miners to make use of discounted electricity rates. Membership of the mining pool will be mandatory, and it will require miners to combine their hardware capacities.

The government will also reserve the right to conduct an emergency shutdown of all mining operations in emergency situations.

Industrial mining firms will be required to register with a regulator and obtain a license to provide transparency, the decrees authors write.

Watch the latest reports by Block TV.

The decree also includes proposals that would see the government create what it calls a Blockchain Valley a regulatory sandbox for companies looking to introduce blockchain technology and circulate [cryptocurrencies].

Emurgo, the venture arm of Cardano, is also reportedly in talks with the government in what it calls a bid to lead the development of a legal framework for security token offerings (STOs) and exchanges (STXs) in Uzbekistan.

Meanwhile, the newly opened Uzbekistan Cryptocurrency Exchange (UZNex) is the first licensed crypto exchange to open in the Turkestan region, reports Regnum. The Uzbekistani government gave its blessing to the new platform, as part of a new set of pro-crypto measures. The media outlet states that a number of blockchain departments are also set to open at some of the countrys leading universities.

Read this article:
Uzbekistan to Throw its Doors Open to Tax-free Cryptocurrency Trading - Cryptonews

More than $11 billion (Dh40.37bn) worth of cryptocurrencies were stolen in different hacking incidents over the past nine years, according to a new report.

The number of hacks peaked last year, with at least eight establishments suffering breaches and losing more than $101 million, figures compiled by Inside Bitcoins, a London-based online news source for cryptocurrency showed.

However, the biggest heist was reported in 2014 with $6.68bn worth of cryptocurrencies vanishing in four different incidents.

A significant amount was lost in cryptocurrency exchange hackings. Other affected platforms include wallets and mining platforms, the report said.

The cryptocurrency market is huge, with more than 12,000 exchange marketplaces where crypto-assets like Bitcoin, Ethereum and other digital coins are traded. Account details, known as private keys in cryptocurrency parlance, can be hacked if not secured properly and the funds held in those accounts can be stolen.

The global market for cryptocurrency was valued at $574.3m in 2017, according to Transparency Market Research, a New York-based consultancy company, which forecasts the market will be worth $6.7bn by 2025 - growing at a compound annual growth rate of 31.3 per cent between 2017 and 2025.

The first hacking was reported in 2011 when Tokyo-based Mt.Gox lost around $17.2m. The hack was allegedly orchestrated from a compromised computer belonging to an auditor within the firm, said the report.

By January 2014, Mt.Gox was the leading Bitcoin exchange in the world and was controlling at least 70 per cent of all global transactions. However, the exchange suffered the biggest hack to date in February, 2014 losing $6.5bn. The company running the exchange subsequently filed for bankruptcy.

Hackers are using a variety of techniques including phishing and viruses to steal a large amount of user data, Inside Bitcoins said.

From the [incidents of] hacking data, it is clear that just like any other network, blockchain technology is [also] susceptible to hacking. This calls for collaboration between users and investors to minimise losses, it added.

Blockchain, the technology behind cryptocurrencies, is a digital chain of transactions that are linked to each other using cryptography - a mechanism for secure communications - on an open ledger.

Last year, cyber criminals stole nearly 7,000 Bitcoins worth $60.5m from Malta-based platform Binance, one of the worlds biggest cryptocurrency exchanges.

The hackers used a variety of techniques, including phishing, viruses and other attacks, said Zhao Changpeng, chief executive of Binance, on the companys blog while detailing the attacks impact.

The hackers had the patience to wait, and execute well-orchestrated actions through multiple seemingly independent accounts at the most opportune time. The transaction is structured in a way that passed our existing security checks, he added.

Despite increasing incidents of breaches, industry experts expect more users will buy cryptocurrency in the coming years.

With more marketplaces supporting cryptocurrency payments, many consumers will switch to cryptocurrency accounts that are accessible by mobile, says US researcher Gartner. By 2025, 50 per cent of people with a smartphone but without a bank account will use a mobile-accessible cryptocurrency account, the research firm said.

Updated: January 22, 2020 03:27 PM

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More than $11bn lost in cryptocurrency hacking since 2011, report says - The National