Cryptocurrency lending amount exceeds 2 trillion yen
Genesis Trading, a leading broker that provides crypto asset (cryptocurrency) trading, lending and custody services, has released a market observation report for the first quarter of 2021. He reported that the influx of new market participants was increasing.
“If 2020 was the beginning of an era of institutional entry into cryptocurrencies, the pace of inflows would explode in the first quarter of 2021,” said Matt Ballensweig, head of lending for institutional investors at Genesis. It has increased. “
He explained that much of the trading volume in the first quarter came from new market participants, and many were the first companies to own Bitcoin (BTC).
According to the official announcement, the amount of new cryptocurrency loan in the first quarter of 2009 exceeded 20 billion dollars (about 2 trillion yen), which is 163% of the loan amount of 7.6 billion dollars (about 820 billion yen) in the fourth quarter of 2020. It was a higher number. Since starting the lending business in March 2018, Genesis has a total loan amount of 40 billion dollars (about 4 trillion yen).
Increased Bitcoin purchases by companies
In-kind trading increased 287% from the fourth quarter of 2020 to reach $ 31.5 billion. Genesis’s launch of Genesis Treasury, a division that supports companies interested in holding Bitcoin as a financial asset, also appears to have contributed to the increase.
For customers in the top 100 in terms of over-the-counter transactions (OTC transactions), the percentage of companies has increased, accounting for more than 25% of the total transaction volume.
Prior to the first quarter of 2021, hedge funds and passive funds were the largest customers in OTC volume, but the ratio changed as companies began buying Bitcoin as a financial asset in the first quarter.
Genesis explains that the purchase of Bitcoin by companies such as Tesla, MicroStrategy and Square has increased the number of companies considering incorporating Bitcoin into their financial portfolio.
“There is a great deal of interest in Genesis Treasury’s services to support its portfolio of corporate financial assets, and we expect this trend to continue throughout the year,” Ballensweig said.
BTC lending ratio drops
In the virtual currency lending sector, demand for Bitcoin borrowing is sluggish. The percentage dropped from 54% in the 4th quarter of 2008 to 43%. Instead, demand for Ethereum (ETH) increased from 16% to 27%, with altcoin, including Ethereum, accounting for about 35% of Genesis lending.
Genesis cites the rise of DeFi (decentralized finance) for this reason. He explained that hedge funds that actively utilize the DeFi protocol are borrowing Ethereum from Genesis.
Negative divergence of grayscale investment trusts
Another factor was that the grayscale Bitcoin investment trust (GBTC) turned to a discounted price in the secondary market.
When GBTC has a premium price, investors buy GBTC in the price range equivalent to normal physical Bitcoin, and after the lockup period is reached, GBTC is expensive (with premium) I had a chance to make a profit by selling it in the secondary market where it was being traded. However, since GBTC is traded at a lower price than the spot price (discount) in the secondary market, it has become difficult and the demand for Bitcoin lent out to buy GBTC has decreased.
Relation:What is the impact of the “negative divergence” of grayscale investment trusts on the Bitcoin market, which is the lowest ever in the -10% range?
To respond to this decline in demand, Genesis has reduced the annual interest rate on Bitcoin lending from 3-6% to 1-3%.
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“Cryptocurrency” means “cryptographic assets”