Successful Case of Using Short Selling At Our P2P Platform
Since the end of 2018, the cryptocurrency market has been quite unstable, thus demonstrating rather unexpected ups and downs for market players. In order to maintain their positive fiscal positions, many crypto holders resort to applying various strategies to keep and maximize their assets. In this short article, P2P lending platform LendaBit outlines one of such strategies that platform users apply while borrowing or lending cryptocurrencies, which is known as ‘short selling’.
Substantially, short selling of cryptocurrencies pertains to the process of selling cryptocurrencies borrowed by a person with the intention of buying back at a later date and at a cheaper price. And, as a result, the difference between the price paid and the costs incurred is the profit. Here is a recent example how a user on LendaBit has managed to profit from exchange rate differences.
These are the main numbers to focus on:
On January 10, the Bitcoin price amounted to 4 050 USD;
On January 21, its price descended to 3 550 USD.
Primarily, on January 10, the borrower applied for a loan in the amount of 1 BTC secured by 8100 USDT collateral for a period of 1 month. In view of the fact that the initial LTV ratio (Principal Loan Amount + Interest/Total Value of Collateral × 100) must be 50%, the platform user could not apply for a larger loan amount due to the volume of pledged collateral.
Now, let us calculate the fees paid by the borrower for using the services of LendaBit.com:
2% commission from the lent amount: 1 × 0.02 = 0.02 BTC.
Interest rate for 10 days: 1 × 8% × 10 days/360 days = 0.002222222 BTC.
Total expenses: 0.02 BTC + 0.002222222 BTC = 0.02222222 BTC (or 90 USDT).
The obtained loan in the amount of 1 BTC was sold on January 10, which equals 4050 USDT.
In 10 days, on January 21, the user bought 1 BTC at the rate of 3550 USD. The difference between the price paid and the costs incurred built up 500 USDT.
Therefore, thanks to affordable lending services offered by LendaBit.com, the user’s net income in 10 days amounted to 410 USDT (500 USDT ̶ 90 USDT). As a result, the user initially saved his 1 BTC and additionally earned 410 USDT. Do not you consider it an example of real success?
Summarily, do not shy away from challenges and choose the most appropriate variant to solve any dilemma facing you.
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Deniss has been in asset and risk management for more than 20 years in one of the top Latvian banks.
He is highly proficient in finance, investing, blockchain and startup development.
Being CEO at LendaBit.com, he is dedicated to solving company problems using impeccable judgment and critical thinking skills.