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Disclaimer: Nothing in this report constitutes investment advice—I am just reporting on my accounts and its progress on each platform. You should not use this report to make financial decisions. I recommend you seek professional advice from someone who is authorized to provide investment advice.
Hey everyone and welcome to the HODLer’s Den!
Here you will find information on my crypto investment portfolio straight from a HODLer’s perspective. This section will focus on HODLing cryptos and interest-earning platforms.
BlockFi
Updates
Bitcoin Rewards Credit Card
We are half way through quarter 2 and anxiously awaiting news of the Bitcoin Rewards Credit Card from BlockFi.
As time passes, it will be getting plenty of competition—Gemini recently announced their Gemini Credit Card which allows users to earn up to 3% in crypto with no annual fee.
Celsius Network is also working on a rewards card which may be released in Q2, but most likely will be delayed until later in the year.
If Gemini is able to deliver upon their Gemini Credit Card, it will be difficult for BlockFi’s Bitcoin Rewards Credit Card to compete against.
Bitcoin Lending
BlockFi has two different kinds of clients accessing loans: retail clients, e.g. any non-business entity, and institutional clients.
Retail clients borrow directly through the mobile or web app, receiving funds that are secured by the value of their cryptocurrency holdings on BlockFi’s platform.
Institutional borrowers, on the other hand, have the option to secure over-collateralized, one-to-one collateralized, or under-collateralized loans.
Bitcoin-backed loans can be advantageous for investors who currently hold Bitcoin and are bullish on the future trajectory of the price, but need immediate liquidity for an unexpected expense or investment opportunity.
Bitcoin-backed loans offer the ability to continue holding Bitcoin while achieving liquidity without the tax burden of selling Bitcoin.
Updated Rates
After a recent rate change effective for April 1st, 2021, BlockFi once again made another change to several assets on the platform.
Reasons for the updated rates given by BlockFi: “We set rates by looking at where we can find compelling risk-adjusted returns with a minimal tolerance for loss. As market dynamics change, our rates also change to reflect the current market conditions. This ability to adjust rates with market conditions is important, particularly within the rapidly shifting Bitcoin market.”
Forces Affecting Bitcoin Price
According to BlockFi analysis, 4 forces affect Bitcoin price.
Institutional Adoption: Widespread institutional adoption creates a shortage of Bitcoin available in circulation. On-chain analysis shows that Bitcoin’s circulating supply continues to decline.
Accessibility: Traditional FinTech companies like PayPal, and Square, in addition to crypto native companies like Coinbase and BlockFi, have increased Bitcoin’s accessibility to the point that average consumers can easily purchase, manage and secure their own with the tap of a button.
Bitcoin Halving: Bitcoin halves every 210,000 blocks mined, or about every four years, and it halved for the third time in May 2020. This cut the mining rewards from 12.5 BTC to 6.25 BTC for every data block mined.
Public Opinion: Public opinion, especially the views of prominent tech and financial figures, play an important role in Bitcoin’s price.
Interest Earned
It has been 4 weeks since the last BlockFi report and during that time my portfolio gained roughly 100 USD—a 1% increase. I track my progress with each lending platform using a Google Spreadsheet.
Bitcoin (BTC) is currently at 48.4k USD while Ethereum (ETH) is at 3810 USD. Both of these assets make a majority of my BlockFi portfolio and it is clearly reflected in my portfolio. Both of these assets have pulled back recently and they both have a strong impact on my interest earnings.
However, as a HODLer a market correction allows me to accumulate and compound my earnings. Also note that even though we have a pull back, my overall account balance grew by 10k USD in the last 4 weeks. In the long run, my account will continue to grow and I can ignore market conditions.
Conclusion & Prospect
With plenty of lucrative yields available on decentralized finance (DeFi), I am tempted to shift funds from BlockFi to increase my earning potential. In addition, the recent updated rates make BlockFi extremely unattractive. Rate changes are expected and it occurs across all the lending platforms that I use to earn a yield/interest. Most of the time, rate reductions are actually good indicators because it could mean high demand or interest in the platform. Only time will tell if BlockFi and other CeFi platforms are able to compete with DeFi protocols for competitive yields.
If you follow my progress reports, you should know that I consider my BlockFi portfolio as my personal retirement fund or 401k. I plan on investing long term with BlockFi and I do not expect to withdraw from my portfolio for quite some time. The interest rates on BlockFi are not the best, but they remain competitive in the crypto space. The great thing about BlockFi is that they do not require a utility token which means everyone benefits in the same way regardless of their portfolio allocations.
With Gemini’s Credit Card offering 3% back in crypto and no annual fee, I do not think BlockFi’s Rewards Credit Card will stand a chance. BlockFi will need to add extra layers of incentives to justify the annual fee. They were the first to announce the card so hopefully they will also be the first to release one.
I believe BlockFi will remain sustainable for a couple more years because we are still early in crypto. Not everyone will have the capital to utilize DeFi protocols as gas fees are still a problem. Buying crypto is also pricey because users will have to pay platform fees and additional network/gas fees when they decide to move assets onto a DeFi wallet. I will continue to leave a portion of my crypto investment on BlockFi to mitigate risk.
What I Am Doing
This section is dedicated to paid subscribers as I will go into details of what moves I am making with my interest-earning portfolios.
You are currently reading the Free Version. If you would like more information, please consider switching to a paid subscription.
Each week I will report on a different interest-earning platform that I use—mainly, Celsius Network, Bitrue, Crypto.com, and BlockFi.
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