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Genesis Capital Records $870 Million in Q3 Loans as Centralized Crypto Lending Market Widens

Genesis Global Trading Reveals Crypto Lending Is Alive and Kicking in the Bear Market

Reading Time: 2 minutes by on February 1, 2019 News

Digital Currency Group-owned cryptocurrency trading and lending company, Genesis Global Trading, has published its “Digital Asset Lending Snapshot” for Q4/2018 in which it reveals that its loan originations have ballooned to over $1 billion in 2018 despite the downturn in the market.

Genesis Loan Book Doubles in Q4/2018

On January 30, Genesis Global Trading published its “Digital Asset Lending Snapshot in which it states that its loan originations have more than doubled in size in the fourth quarter of 2018 from $500 million to a total of $1.113 billion.

The crypto lending company attributes the surge in borrowing to new crypto hedge funds and trading housing utilizing “spot” borrow.

Genesis Trading Data

(Source: Genesis Global Trading)

Bitcoin Remain Top Lending Asset

Going into the fourth quarter, Genesis’ loan portfolio was composed of 60 percent BTC and 40 percent altcoins with XRP making up around 50 percent of the altcoins. Ninety-eight percent of the borrowed BTC was using for hedging purposes such as arbitrage, remittances, and basis capture.

When the price of bitcoin dropped by 16 percent in one day on November 16, 2018, however, BTC borrowing surged as short-sellers piled on to place shorts on the leading world’s digital currency with the anticipation of it moving below the $6,000, $5,000 and $4,000 mark. Many of these short sellers traded directly with Genesis. 

The loan origination of BTC subsequently increased to the point where it made up almost 75 percent of Genesis’ loan book in Q4/2018. ETH lending doubled from Q3 to Q4 but makes up less than ten percent of the loan portfolio. XRP remains a popular borrowed asset but has dropped from 17.8 percent to 8.6 percent in Genesis’ loan book as XRP has outperformed bitcoin in the last quarter of 2018. BCH borrowing has dropped to almost zero in Q4/2018 while ETC borrowing remained stable. 

Asset Composition

(Source: Genesis Global Trading)

“We are very pleased with the strong growth of the lending business and continue to believe that digital asset lending will play an important role in developing this ecosystem. We are committed to investing in this business and expanding globally in 2019,” said Genesis CEO, Michael Moro.

Genesis has also launched fiat currency lending in the fourth quarter of 2018 in response to demand from its lending counterparties. Through this new offering, long-term cryptoasset holders with appreciated assets are able to borrow fiat currency against their digital asset holdings.

The increase in crypto lending is a clear sign that more and more sophisticated investors are entering this sector who are deploying advanced trading strategies to take advantage of opportunities in the cryptoasset market. 

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