“Only a fool would lend out his bitcoins”
About the bitcoin cash and carry strategy and the most important elements to consider
In the Dutch media this week a journalist stated literally: “No-one would dare to lend or borrow bitcoin”. He reasoned that the volatility would harm one of both parties in the end and that as such lending or borrowing would not be interesting for anyone. Unfortunately, most journalists who are writing their articles without proper research, come up with nonsense like this.
The bitcoin lending market is quite an active market and you might wonder why someone would be interested to lend or borrow bitcoins in the first place. For instance in case when someone would like or need to short sell bitcoin (i.e. selling a bitcoin that you do not own), you would need to borrow it first. Short selling doesn’t necessarily need to be a directional bet on the market. It can also be ‘a leg’ in a trading strategy. One of the strategies that comes to mind would be the strategy where you trade both futures and bitcoin spot; the so called cash and carry strategy. For bitcoin holders this strategy isn’t of interest because it could result in a decreasing bitcoin position. But for those who don’t believe in bitcoin, but who would love to profit from market inefficiencies, the play is quite interesting.
To state that only a fool would lend out his bitcoins is therefore in my opinion quite an uneducated statement to make.
