CandleFocus

Crypto lending revives from the ruins of the 2022 market mania

Author: Content Editor
Bitcoin's surge above $100,000 has sparked a revival in the crypto lending market, particularly in decentralized finance (DeFi) applications. Funding rates for leverage have increased more than tenfold since June, and crypto lending volumes have nearly tripled compared to last year. DeFi platforms are leading the resurgence, accounting for $31 billion in loans in the first three quarters of 2024. The introduction of crypto ETFs in the US and favorable regulatory promises from the Trump administration have also contributed to the market's growth. However, lending activity is still only half of its 2021 peak, with many institutional players remaining cautious after the losses suffered in 2022 and 2023. Centralized lenders are also seeing a recovery, with Galaxy Digital and Kraken reporting increased loan volumes. DeFi lending is benefiting from arbitrage strategies and market speculation, but retail investors are prioritizing quick returns from speculative tokens over earning yields through lending. The market is showing signs of a more stable lending ecosystem, but sustainability without previous bubble-like conditions is uncertain.

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