Lending or margining money is an option in the crypto world. What does this mean? Let us explain you all in a simple way. If you want to increase the capital amount that you want to invest in BTC, you can leverage USDT and put it on BTC. This will increase the capital amount and on other hand increase the profit gain. But is that it, what about the interest that will put on the leverage amount? It will be compensated from the BTC’s price appreciation and compensate itself.
This might be a new concept for traders who entered the crypto world recently, but for the old traders and the ones who are willing to take the risk even in the volatile situation, this is an opportunity to grow the percentage of their profits. They observe the leverages and margins that are been taken up in the market of BTC and tether to predict if the market is going to go bearish or bullish. But in spite of this theory, BTC reached its All-time high even though the BTC/USDT borrow metrics showed that it reached the lowest since November 20, 2020. At the current moment, even though this figure favors all the bulls of the market, it is to think for the next move of catalysts who worked upon the current situation.
The theory was simple, whenever bitcoin revolution app traders and people in the market borrow USDT or any other stable coin they use it to trade other costly cryptocurrencies for the long run. But, if they borrow BTC in the same pair, it is mainly for short positioning and exiting. Theoretical meaning is whenever USDT/BTC leverage or lending ratio goes up, the market price of BTC is likely to touch new heights and the same goes vice versa with the falling. But the current data is quite opposite to the prediction were looking at the OKEx charts they have been holding eight times larger USDT loans than BTC-denomination loans. Albeit explains while been on the bullish side that this is near the lowest level since November 17, 2020.
If we look at the current charts, the analytics is favored more towards the bulls. But why is there a great drop in the price of $60k (stable) to $50k (current price)? Around this time, there was a massive spike in lending of USDT rate in the mid of March as BTC surpassed the $60k milestone. The leverages were long and reverted a conversion rate of almost 13% decrease over the following days. This made people stop utilizing the leverages on stable coins to look at a decrease or a dip in the market overall.
A small 1% fee on the leverages that the traders take was not enough to stop them from longing on BTC. The point is that this fact may remain a positive indicator until the demand for BTC or any other stable coins once again emerges in the market. Which may increase the annualized fees by a few more percent and affect the leverage cycle of traders.