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Crypto Credit Bubble Is About to Burst, Warns Group of Wall Street Traders

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Tue, 10/29/2019 - 14:20
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  • Wall Street vets believe that the cryptocurrency credit could experience a massive blow-up

Cover image via www.123rf.com

Cryptocurrency lending has exploded over the past few years, and it now represents a $5 bln industry. 

According to a Bloomberg report, which cites "a group of former Wall Street traders," this growth might be way too quick, which instills fear of another bubble. 

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The quick rise of crypto lending was propelled by the great Bitcoin crash that took place in 2018. Instead of selling or holding their coins at lower prices, many wanted to earn interest on their not-so-valuable coins and lend them out.

BlockFi CEO Zac Prince says that their business, which is backed by Galaxy Digital boss Mike Novogratz, is doing great without any late payments or losses.  

Genesis Capital, one of the jewels in the crown of Barry Silbert's Digital Currency Group, has originated more than $3.2 bln in crypto and cash loans since March 2018. Genesis Capital's launch had incredibly good timing given that it managed to capitalize on a year-long bear market.     

CEO of Genesis Capital and Genesis Trading Michael Moro claims that market participants should understand the risks in the crypto lending sector.

“Whether folks understand risk is where the scariness comes in. I see more competition and that leads to prices that don’t make sense relative to the risk and collateralization," Moro told Bloomberg.    

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Back in September, Ethereum co-founder Vitakil Buterin claimed that decentralized finance (DeFi) products shouldn't be treated as a safe investment.    

As reported by U.Today, Malta-based cryptocurrency exchange also recently ventured into crypto lending by allowing its users to earn interest on three coins, which shows that this niche market is becoming very crowded.   

About the author

Alex Dovbnya (aka AlexMorris) is a cryptocurrency expert, trader and journalist with extensive experience of covering everything related to the burgeoning industry — from price analysis to Blockchain disruption. Alex authored more than 1,000 stories for U.Today, CryptoComes and other fintech media outlets. He’s particularly interested in regulatory trends around the globe that are shaping the future of digital assets.

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  • It is the first day of the month and Ripple has released one billion XRP from its escrow wallet. The community traditionally expects a price drop after such massive dumps

Cover image via stock.adobe.com

It is the first day of another month – this means that Ripple has lavishly thrown XRP from its escrow wallet – one billion coins. Since the start of 2020, this monthly dragon-sized amount was withdrawn in two portions of 500 mln XRP each.

XRP escrow
Image via Twitter

While the XRP price is in the green zone, trading at $0.173095 on CoinMarketCap, the comments under the tweets about the XRP release signify that the community is either indifferent (having got used to these releases already) or is expecting another price drop in the short term.

In January 2018, XRP, the third-largest cryptocurrency, reached an all-time high of nearly $3. Since then, XRP has been light years away from the ATH.

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Many skeptics say that the XRP price is not going to rise even in the long term, mocking those who remain faithful, holding bags of the coin.

As earlier reported by U.Today, many in the community believe that regular XRP releases made by Ripple prevent the price from rising and reaching at least $1. In 2019, a petition was set up on Change.org by crypto influencer ‘Crypto_Bitlord’ who wanted Ripple to stop dumping XRP.

Curiously, later on, another petition appeared on the same platform, requesting Ripple to accelerate the release of XRP in order to increase the coin’s adoption, which would assumingly lead to a massive price surge.

About the author

Yuri is a journalist interested in technology and technical innovations. He has been in crypto since 2017. Believes that blockchain and cryptocurrencies have a potential to transform the world in the future. ‘Hodls’ cryptocurrencies. Has written for several crypto media. Currently is a news writer at U.Today.

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