30 Aug 2022

Has the crypto credit storm settled?

While crypto lending data is scarce, Nexo’s daily customer liability attestations indicate that the crypto credit storm has settled, with users again returning to the lending market.
Source: Nexo, Armanino, WebArchive (Wayback Machine)
Armanino’s daily attestations of Nexo may be used as a proxy for the underlying global trend and usage of centralized crypto lending platforms.From May 12th until July 21st, Nexo’s customer liabilities plunged 32% and by 80,000 BTC, from 250,223 BTC to 169,672 BTC. An influx of customer withdrawals likely caused this following the uncertain days amid the turmoil and collapses of Celsius, Voyager, Babel, and Hodlnaut. Since July 21st, however, we note that the withdrawal pressure in Nexo has seemingly ended. As of August 29th, Nexo’s customer liabilities amount to 199,170 BTC per the Armanino attestations. Still, Armanino reports customer liabilities in BTC, while we do not know the actual composition of the basket of assets in Nexo's lending operations. Strengthening ETH price has likely contributed to the overall uptrend. Yet, the steady uptrend also suggests that the consistent outflows from Nexo experienced during the crypto credit crash in June have settled. We do not have similar attestations from other major lending platforms. Nevertheless, one can assume that the Nexo trend mirrors what's occurring elsewhere, given the reduction of devastating bankruptcy headlines. Overall, this suggests that the crypto lending market is normalizing, which is a positive signal for the general health of the crypto market onwards.
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