As Bitcoin Falls, Genesis’s Lending Platform is Booming with Business
Bitcoin has taken a bearish turn this week, dropping about 16% from last week. This bearish turn is bad news for investors, but good news for Genesis’s new crypto lending platform, Genesis Capital.
New York-based Genesis Global Trading launched a crypto lending platform, Genesis Capital, earlier this year. Earlier this week, the platform collected its largest single-day volume of loans in history, gathering $30 million in crypto loans on Tuesday.
The news was reported by CEO Michael Moro, who claims the platform usually lends out $2 million per day, on average.
Why would people borrow crypto when the markets are down? Many of the borrowers are taking a short position on a given coin. Hedge funds might borrow bitcoin or Ethereum to short it, for example, as would retail investors.
Borrowers would borrow some amount of bitcoin, sell that bitcoin today, and then repay that bitcoin when the loan comes due. As long as the price of bitcoin continues to drop, the borrowers make a profit.
Part of the boom is also connected to the launch of Ethereum Classic (ETC) trading on Coinbase. Earlier this week, Coinbase announced the launch of ETC trading on the platform. Coinbase, which is famously selective with which currencies it allows for trading, is now accepting deposits of Ethereum Classic.
Where will Genesis Capital go next? The company claims that they don’t currently use the collateral they receive. People borrow and short using the Genesis Capital platform, but Genesis doesn’t put that collateral to work.
“All the people borrowing and shorting are putting up collateral,” Moro explained in an interview with Business Insider. “We have the ability to turn around and do whatever we want with the collateral.”
Genesis Capital is reportedly considering USD loans. This would allow a bitcoin holder to liquidate his or her crypto without actually selling it. You get the current USD value of your bitcoin and gain access to the cash, but you don’t have to sell your bitcoin.
Ultimately, this news goes to show that crypto bear markets aren’t always a bad thing: there are opportunities to be found in bear markets – particularly for crypto lending services like Genesis Capital.