Genesis Capital, an institutional trading firm focused on providing two-sided liquidity for digital currencies, has released its latest quarterly report – “Digital Asset Lending Snapshot – Q1 Insight”.
The company, which is also an affiliate of Genesis Trading, provided $425 million in loans this quarter, which helped to surpass the $1.5 billion lending mark in the first quarter of 2019. Two months ago, Newconomy covered the news of Genesis hitting the $1 billion milestone.
More than 68% of the entire loan book consists of bitcoin, which continues to be the dominant asset, and represents a near 7% increase compared to the previous quarter. The report notes that there is a “consistent BTC borrowing demand among market-makers and high-frequency trading firms that need working capital for arbitrage opportunities”.
Unlike bitcoin, both Ethereum and Ethereum classic attracted less interest from investors. Litecoin, meanwhile, has increased its share from 1.1% to 3.6%. Most notably, the USD portfolio has seen continuous growth in the first quarter, after it had been introduced in Q4 2018. Today, it accounts for 10% of the entire portfolio.
“They [altcoins] are a bit more illiquid, less frequently traded than bitcoin. [During a bitcoin price run] you’ll see the magnitude of [their] moves be a little bit bigger,” says Genesis CEO Michael Moro.
One of the most notable trends observed is the increased interest from market participants when prices hit recent lows. For instance, “in early February we saw a large uptick in ETH short-interest when the price was $100, and loans outstanding ballooned to the highest level over the quarter,” however, the “interest fell 30% after the price ticked up on February 7 to $120”.
In early April, the interest has been decreasing as the market prices have been pushing higher, which implies that “borrowers got ahead of the rising market and decreased short positions just in time”.
In general, loans provided by Genesis Capital consists of 40% of the entire portfolio, borrows 38%, while active loans account to 17% so far. As of March 31, the company has $181 million in active loans. Genesis Capital continues to accept digital assets as collateral for cash financing in order to provide liquidity to business.