The latest report by securities lending platform Lendingblock has revealed that not only has lending supply and borrowing demand for cryptocurrencies remained strong, but it is also growing among the top crypto hedge funds, exchanges, market makers, and trading houses across the globe, according to a press release shared with Coin Rivet.
The report examined the borrowing and lending needs of leading crypto institutions between January and April 2019.
41% of the institutions sampled reportedly stated that they would expect to be making more than five loans at any one time. More than 50% showed their demand for borrowing to be higher than lending.
82% of firms expect to be taking at least one loan at any given time, and out of those, 30% expect to have more than five.
The report identifies that borrowing digital assets is increasingly driven by working capital requirements rather than purely for short selling, which has “historically been the primary driver for borrowing”.
Kelly Pettersen, head of business development and marketing, stated: “Firms are now relying on digital assets for short-term capital needs versus a borrow to short.
“This data tells us that the trend is shifting to reflect a reliance on and belief in crypto to support business’ every day operations rather than on betting in the short term that the asset drops in value.”
Elsewhere, there is reportedly substantial interest to increase the use of stablecoins in the lending market – specifically US-backed stablecoins that institutions can use for collateral.
This sentiment has been reported by 68% of firms, with 64% of respondents stating they want to use stablecoins as collateral when they enter into a lending deal.
Further insights provided by the report outline how 50% of institutional participants expect to be lending or borrowing between $1 million and $5 million at any point, while 25% of respondents expect to be lending or borrowing between $5 million and $10 million and 25% above $10 million.
Bitcoin and Ethereum remain the top two digital assets that clients are interested in borrowing and lending, with lower but still material interest in other assets including Bitcoin Cash, Litecoin, and XRP.
Steve Swain, CEO of Lendingblock, states: “As the results show, borrowing demand is strong. This indicates healthy returns for lenders given rates are set by market equilibrium on the Lendingblock exchange.”
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