Demand to Borrow Bitcoin Declining While Ether sees Significant Increase: Genesis Q1 Report

The company saw a “tremendous” amount of interest from treasury executives, taking positions in bitcoin for the first time.


Genesis, a wholly-owned subsidiary of Digital Currency Group (DCG) which is also the parent company of Grayscale, released its Q1 2021 report that shows that it facilitated over $60 billion in digital asset trades, loans, and transactions across the quarter.

The institutional digital asset lender and prime brokerage service provider reported an increase of over 25% of total activity in volume from corporates. There has been a tremendous amount of interest from treasury executives, which is expected to continue throughout the year. Matt Ballensweig, Head of Institutional Lending at Genesis said,

“If 2020 marked the beginning of the institutional epoch in crypto, the first quarter of 2021 was a Cambrian explosion of institutional inflows into crypto assets of all stripes.”

While spot saw $31.5 billion in volume, a jump of 287% from the previous quarter, $10.5 billion were traded in its OTC market, which was a surge of 133% QoQ. Much of this growth, Ballensweig said, came from new market participants, “many of whom are corporates taking positions in bitcoin for the first time.”

The key drivers of growth were higher frequencies of trades and increased notional per trade from crypto-native hedge fund clients.

In Q1, the company recorded over $20 billion in new originations, increasing 163% from the previous quarter. Active loans outstanding meanwhile have gone up 136% to $9 billion.

Genesis saw growth for twelve straight quarters in cumulative originations, which increased 94% to bring the total originations since launch in March 2018 to $40 billion.

The company recorded a decline in bitcoin borrowing demand, which, as we reported, was also noted by BlockFi, which as a result decreased the interest rate on its crypto assets for the second time in just two months.

This drop in BTC yields is due to the supply side expanding while the demand side has fewer low-hanging opportunities.

“BTC basis and funding arb still very much present- turning a lot more institutional heads to seriously look at crypto yield opps,” noted Ballensweig.

BCH -5.95% Bitcoin Cash / USD BCHUSD $ 510.16
-$30.35-5.95%
Volume 5.59 b Change -$30.35 Open $510.16 Circulating 18.85 m Market Cap 9.62 b
1 d Lloyds to Auction off Vehicles from Mad Max FURY Road Film, Crypto Accepted 1 d AMC Theaters CEO Is Considering Adding Payment Support for DOGE By Year-End 6 d Interactive Brokers Founder Already Red Pilled, Has Been “Itching” to Offer Crypto Trading for a Long Time
ETC -8.48% Ethereum Classic / USD ETCUSD $ 46.36
-$3.93-8.48%
Volume 745.25 m Change -$3.93 Open $46.36 Circulating 130.24 m Market Cap 6.04 b
2 w Robinhood Trading App Rolls Out “Dollar Cost Averaging” for Crypto Investments 2 w Crypto Market Dips and Over 165k Traders Get Liquidated for More Than $890 Million 1 mon South Koreans Turn to Serum (SRM) As Solana (SOL) Ecosystem Pumps
XRP -6.80% XRP / USD XRPUSD $ 0.93
-$0.06-6.80%
Volume 3.64 b Change -$0.06 Open $0.93 Circulating 46.72 b Market Cap 43.38 b
1 d SEC Scores Minor Victory Against Ripple As Court Rejects Employee Trading History Motion 1 w Solana (SOL) Dominating Institutional Interest, Accounting for Over 86% of the Total Inflows 1 w More than 65% of South Korean Crypto Exchanges to Shut Down Once FSC Deadline Hits
LTC -5.89% Litecoin / USD LTCUSD $ 150.69
-$8.88-5.89%
Volume 2.16 b Change -$8.88 Open $150.69 Circulating 66.75 m Market Cap 10.06 b
1 d Lloyds to Auction off Vehicles from Mad Max FURY Road Film, Crypto Accepted 1 d AMC Theaters CEO Is Considering Adding Payment Support for DOGE By Year-End 6 d Interactive Brokers Founder Already Red Pilled, Has Been “Itching” to Offer Crypto Trading for a Long Time

However, its loan portfolio increased substantially in value through a combination of new issuance across cash, ETH, and Decentralized Finance (DeFi) assets. The biggest increase was in ETH borrowing, from 15.5% in Q4 2020 to 27% in Q1 this year.

ETH and other altcoins now represent 35% of Genesis’s lending business. The report notes the institutional adoption of ETH, which became a major theme on the back of DeFi’s growth with EIP 1559 providing deflationary catalyst bolstering ETH’s monetary premium.

“With the rise of DeFi protocols, and yield opportunities on platforms including Compound, Uniswap, Sushiswap, Aave, and Maker, there are more openings for traders to arbitrage Centralized Finance (CeFi) lenders with DeFi.”

Get Daily Headlines

Enter Best Email to Get Trending Crypto News & Bitcoin Market Updates

What to Know More?

Join Our Telegram Group to Receive Live Updates on The Latest Blockchain & Crypto News From Your Favorite Projects

Join Our Telegram

Stay Up to Date!

Join us on Twitter to Get The Latest Trading Signals, Blockchain News, and Daily Communication with Crypto Users!

Join Our Twitter

Add comment

E-mail is already registered on the site. Please use the Login form or enter another.

You entered an incorrect username or password

Sorry, you must be logged in to post a comment.
Bitcoin Exchange Guide