Apr 24, 2024 – 5.00am
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Johnny Phan, a resident of Sydney, mentions that the surging prices of cryptocurrencies are driving more Australians who have accumulated substantial digital assets to his venture, Vield. The company specializes in providing loans to clients based on the escalating value of their crypto assets, amidst a widespread price surge that is enabling daring Australians like Mr. Phan to amass wealth rapidly.
According to Mr. Phan, traditional banks or mortgage brokers typically decline requests for loans secured by cryptocurrencies, insisting on liquidating the digital assets before considering the loan application. However, many individuals are reluctant to sell their crypto holdings, anticipating further price escalation. In such cases, Vield steps in to offer loans using bitcoin and ethereum as collateral.
Johnny Phan highlights that the soaring cryptocurrency prices are fueling the growth of his lending business.
Following the initial interest in trading cryptocurrencies and emoji-based digital tokens triggered by the lockdowns during the pandemic and government stimulus payouts, the total market capitalization of the crypto market, encompassing thousands of digital tokens, has reached \(US2.4 trillion (\)3.7 trillion), surpassing the ASX’s total market capitalization of approximately $2.5 trillion.
Mr. Phan discloses his ownership of a frog-themed cryptocurrency called pepe, which has surged by over 7000% since its launch in April last year, leveraging internet subculture and social media platforms.
Popular canine emoji token, dogecoin, has witnessed a 110% increase to \(US23.3 billion in the past year, while its competitor solana has experienced a remarkable 607% surge, reaching a market capitalization of \)US67 billion. Additionally, ethereum, the second-largest cryptocurrency globally, has appreciated by 94% over the past 12 months, attaining a market value of $US383 billion.
Since its establishment in 2021, Vield has extended loans to nearly 150 crypto holders, totaling close to $10 million. The startup is licensed to provide credit and finances its loan portfolio by borrowing from affluent private investors. Borrowers are subject to a 13% interest rate on the loans along with a 2% origination fee.
While many borrowers are banking on the continuous price upsurge to offset the interest costs, it is crucial to note that the crypto markets are notoriously volatile.
Mr. Phan emphasizes the differing perspectives of banks towards cryptocurrencies, stating that while you can leverage your house for refinancing, the same does not apply to crypto assets. He notes a growing interest from professional clients in their services.
YouTube Investigation
Ben Wickenton, a 20-year-old from Warrnambool, Victoria, has capitalized on the surge in solana and bitcoin prices over the past year.
Having encountered numerous references to cryptocurrencies on social media during high school, Wickenton conducted his research on YouTube to explore various digital assets.
As a commerce graduate from Deakin University, Wickenton holds an entry-level position in traditional finance and estimates that about a quarter of his peers are crypto investors.
His initial foray into digital tokens commenced at the age of 18, with approximately 10 to 15% of his net worth allocated to cryptocurrencies. Wickenton views the risk-reward ratio in the crypto market as compelling and segregates his investments by allocating funds for a house deposit into stock index funds, reserving cryptocurrencies for recreational purposes.
While acknowledging the warnings issued by the Australian Securities and Investments Commission regarding the speculative nature of cryptocurrencies and the associated risks, Wickenton remains optimistic about the potential returns.
The surge in trading volumes and adoption of cryptocurrencies in Australia persists despite cautionary advisories on potential losses and susceptibility to fraudulent activities.
Altcoins on the Rise
Adrian Przelozny, the founder of crypto exchange Independent Reserve and a director of Blockchain Australia, reports a significant uptick in the adoption of altcoins, cryptocurrencies with a lower market value than bitcoin, over the past year.
The data from the exchange indicates a twofold to threefold increase in trading volumes of altcoins compared to the previous year. Altcoins, due to their lower market capitalization, are more responsive to market sentiment changes, showcasing heightened volatility and potential returns during bullish cycles in the bitcoin market.
Johnny Phan, drawing from his experience in the traditional payments sector with Westpac and Western Union, reveals his substantial gains from bitcoin investments since 2016. Despite his diversified portfolio, including speculative altcoins like pandora, Phan is gradually shifting his focus back to bitcoin and ethereum, recognizing the inherent risks associated with various digital assets.
Tom Richardson provides insights on various market segments, including equities, debt, cryptocurrencies, software, banking, payments, and regulatory developments. With a background in asset management at Bank of New York Mellon and accreditation from the CFA Society of the UK, Tom brings a wealth of experience to his analysis. For more updates from Tom, connect with him on Twitter or reach out via email at [email protected]
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