Bitcoin Price Q4 Rally Looms as ETF Inflows Hit $642M—Analyst eyes $150K

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The post Why Onchain Crypto Collateral Can Get You Better Loan-To-Value Ratios appeared on BitcoinEthereumNews.com. Fabian Dori, the chief investment officer at digital asset bank Sygnum, says that banks offering crypto-backed loans prefer crypto collateral in the form of onchain assets rather than exchange-traded funds (ETFs), and using onchain collateral can benefit borrowers. Dori said that onchain assets are more liquid, allowing lenders to execute margin calls for crypto-backed loans on demand and offer higher loan-to-value (LTV) ratios to borrowers because the lender can liquidate the collateral in real-time. Dori told Cointelegraph: “It’s actually preferable to have the direct tokens as collateral, because then you can do it 24/7. If you need to execute a margin call on an ETF on Friday at midnight, when the market is closed, then it’s more difficult. So, direct token holding is actually preferable from that point of view.” Loan-to-value ratios in crypto refer to the total amount of a loan versus the collateral backing the loan, like Bitcoin (BTC), Ethereum (ETH), or any other tokens accepted by the lender.  Lending in crypto by centralized institutions sharply declined during the 2022 bear market, which saw the blow-up of several crypto lending firms, but is on the rise again. Source: Galaxy A higher LTV ratio means the borrower is able to access more credit in relation to their posted crypto collateral, while a lower LTV means they will get a smaller loan for the same amount of collateral. Crypto-backed loans are still in their infancy, Dori said, but he was confident that the sector would continue to grow as crypto gains widespread adoption.  Financial institutions are steadily embracing loans secured by crypto as crypto lenders go public on US stock exchanges, and traditional financial (TradFi) firms warm up to the idea of accepting crypto as loan collateral.  Related: South Korea caps crypto lending rates at 20%, bans leveraged loans Crypto…

PANews reported on September 14 that according to Cointelegraph, Mert Mumtaz, CEO of RPC node provider Helius, said that as exchanges abstract different priced stablecoins on the back end and only provide users with "dollar" options, stablecoins pegged to the US dollar will eventually lose their price codes. Mumtaz said that the bidding war for Hyperliquid's US dollar stablecoin (USDH), and the proposals of multiple companies to pledge 100% of their profits to Hyperliquid, show that the stablecoin industry has become "commoditized." It is expected that many companies will issue their own stablecoins in the future, and many existing stablecoin issuers will also build their own payment chains, which may lead to liquidity fragmentation. The best solution to this liquidity problem is for exchanges to accept all stablecoins directly and convert them to the required denomination on the back end without users having to see what is happening. "The end result is that you can't see the code at all. The application will just show "USD" instead of USDC, USDT or USDX, and they will convert all currencies on the back end through a standardized interface."