Sunny days in crypto are here again, but just how hot is it going to get?

Crazy, red, speculative hot, say the folks at BabelFinance.

The Hong Kong-based crypto finance institution, formerly known as BabelBank, announced on Wednesday that the company experienced a sizable surge in demand for bitcoin-collateralized loans in China over the last few months. And while market analysts remain skeptical, BabelFinance is convinced that it’s a “bullish” sign of good things to come.

The crypto-lending firm provides a range of services for different kinds of clients, including crypto investors, mining pools, and other institutions. But it primarily deals in doling out loans denominated in stablecoins, backed by bitcoin, to both retail and institutional investors.

In April, BabelFinance reportedly carried a balance of $27 million in outstanding loans. Two months later, and the company now says that balance has ballooned to more than $100 million—bringing its total to approximately $124 million in loans since first opening its doors in July 2018. In other words, more than 80 percent of all the bitcoin-backed loans that the company has moved in the last year have been executed in just the last 60 days.

And according to the firm, it’s “Chinese speculators” who are driving up the demand.

“Over the past few months, we’ve seen a dramatic increase in speculative borrowing from consumers and institutions,” BabelFinance Founder and CEO Flex Yang said in a statement. “It is clear that in China and elsewhere globally, anticipation is building for higher crypto prices.”

The recent increase in speculative borrowing appears to coincide with a spike in the price of Bitcoin beginning in early April, so the idea that it’s being driven by crypto investors looking to get in while the gettin’s good appears to jibe.

But drawing any broad conclusions from this would be a mistake, said Mati Greenspan, a senior market analyst with eToro, a Tel Aviv-based Bitcoin “social-trading platform.”

“If the numbers are correct, then it would point to a pretty significant increase in the size” of BabelFinance’s business, Greenspan said. But that’s about as much as this tells us. “Ramifications for the industry as a whole would be extremely difficult to derive from this,” he said. After all, the figures we’re talking about here are “chump change in crypto,” said Greenspan.

Ouch.

Still, the fact that the demand for these loans is coming from Chinese investors is curious—not the least of which because the legality of crypto in China is still very much in question.

In fact, the sort of transactions that BabelFinance is conducting “could be illegal” under Chinese law, said a crypto trader familiar with the Chinese market. “Trading exchanges and OTC [trading are] both forbidden,” he said. And “a lending biz is a form of trading.”

Yang, however, insists that this isn’t a problem. “OTC transactions at this stage are legal between individuals [in China] as long as no dirty money is involved,” he told Decrypt. Yang also noted that BabelFinance “conducts all business in cryptos, no fiat money,” providing further protection. But if “Hong Kong's regulatory climate worsens,” he said, the company may move some of its contracts to Singapore.

Nevertheless, while Babel’s business may be booming, it’s best not to get carried away with what this might mean for the market, said the trader. These dollar amounts are a “drop in the bucket” and “not very bullish for the market whatsoever,” he said.

This is, at best, “a mildly positive development.”

To the moon, baby!