It still disturbs me some that the bid volume is going up... Any conclusions to be drawn from this behavior?
If the news is to be believed, Californians are hurting for money. There is a much smaller lender base, since so many states are forbidden from bidding. Has to hurt Prosper's numbers.
Yes, and California is highly influential. In addition to being the most populous state, California enjoys a disproportionately high ratio of lenders per capita. The "California only" experiment in late April generated excitement that had not completely fizzled.
Fustification in Georgia and Illinois sparked advanced interest there a month later. Georgia and Illinois are two other major players, along with New York.
Notice there are three spikes on the graph, day (1) being the tallest. Certainly that strength shows pent-up demand. But most of that $130,000 came from 'slush' money languishing is lender's cash accounts. California lenders had some $150,000 returned to them when April's mini-auction closed mid-stream. "I've got cash there, why not bid? Let's see how this thing works," may have been the mindset in states reawakened at Prosper's launch.
The second and third spikes may be more indicative of what the future holds. The $115,000 spike on day (5) was thanks to fresh money coming into the arena. It occurred about the time on-line transfers of less than $500 would be credited to lender's accounts. Notice that by day (4) lender's vaults had been emptied.
The study on Eric's Credit Community makes no distinction between fresh capital coming to market and existing cash bumped and re-bidding. But with so few listings fully funded, most of the activity on Eric's graph right now has to be new money coming to play. The third spike of $90,000 on day (10) seems to agree. Lenders who plunged in during the first and second wave blew their wads and went back to the well for more, which transferred in that day.
Tall peaks and deep valleys on the graph will settle out as time moves forward. Notice each peak is lower than the last. The conclusion I draw is that pent-up demand is nearly satisfied. Ardent lenders have most of the cash they will bring already sitting on the table. There are not enough lending states to meet borrowing states demand. If they don't beat each other up on price (like they always do), lenders will enjoy an increase in reward for the risk they take versus the 'old' Prosper.
