Why Are Interest Rates Increasing on Crypto Borrowing Platforms? What Effect Does This Situation Have on Bitcoin?

Cryptocurrency Interest rates on based lending platforms have been increasing lately.

Terra’s Interest rates were low as confidence in projects offering crypto loans eroded with the collapse of the country. However, now the situation seems to be reversed. Interest rates on crypto-based loans are on the rise.

How Much Have Interest Rates Changed?

Interest rates have increased noticeably, especially on major platforms. While interest rates increased rapidly on BlockFi, Gemini and Crypto.com platforms, the rates remained unchanged in Ledn until now.

Nexo, on the other hand, has reduced the base balance limits for its users. Thus, users with lower budgets will also be able to benefit from this service.

The firm also Ethereum and USDT He set new equilibrium limits for stablecoins like Stablecoins, citing the reason for this as “finding a sustainable solution for us to maintain our peak rates instead of cutting our returns completely.”

Why Are Interest Rates Increasing?

Lending and borrowing rates are increasing due to changing market balances.

Lack of liquidity in the lending market is seen as the biggest reason for this. Due to the bankruptcy of Celsius and Voyager and the troubles of other companies, borrowing options are also decreasing.

Mauricio Di Bartolomeo, co-founder and chief strategy officer of Ledn, said that he thinks the demand for debt outstrips supply as there is a significant outflow of supply from the market.

What is the Effect of This Event on the Market?

The increase in interest rates given to users by crypto money platforms is actually a positive event for the market. Because this shows that companies are more optimistic about the future of crypto money prices.

Although a serious regression after the Terra incident upset all these balances and caused many investors to exit the market, it is seen that this ruin is slowly starting to disappear.