I don't know about you but I don't like the idea of my hard earned crypto sitting idle and not earning and compounding in my sleep. The fear of inflation has been engrained in us from a young age. Money tomorrow is worth less than money today. So you have to put that money to work or otherwise inflation will price you out of a lot of things in life. Even though Bitcoin is hard money and a good store of wealth in comparison to fiat, I still feel uneasy just owning it. Idle.
When I learnt about Blockfi, which mimics current centralised finance systems, (you deposit your asset and you get a return because the asset is being lent out at a higher return), it wasn't hard to get myself onboard. For an amount of up to 1 BTC, you can get 6% APY (Annual Percentage Yield) which is also compounding on a monthly basis. This is much better than the 0.7% I would otherwise get from my cash savings (which you also have to do actions to unlock this "high" interest rate such as depositing money each month, or set number of transactions that need to occur etc if you don't satisfy these conditions, interest you get is 0%).
Just today I received an update from Blockfi that their rates are changing. Going down actually. For BTC, it is now for an amount of up to 0.5 BTC for which you will receive 5% interest rate and 2% thereafter. Here we go away. Haven't I seen this gradual decrease in interest somewhere else before...yes in my cash savings account!
Normally I'd be groaning at these sorts of changes. But not today. Despite this price drop, I remain quite optimistic. Why? Well for one, BTC is not subject to inflationary measures such as fiat. So your BTC tomorrow will be worth more than your BTC today. Not the other way around. So even without the compounding interest on your BTC, you should do alright. Second, the decrease in the interest rate suggests that people are not borrowing BTC to buy more fiat but they are borrowing fiat to buy more BTC.
These conditions derive from low demand to borrow BTC in a bull market, since many market participants want to borrow USD to buy more BTC instead.
So despite the recent dips in the market, I'm still pretty bullish on BTC. Well, this interest decrease certainty says it. I can sleep at night knowing that whatever happens to these interest rates, one BTC tomorrow will be worth more than BTC today.
Until then, keep stacking!
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