Several institutions are parking their empty money on Genesis Capital’s balance sheet, the cryptocurrency lender and trading company announced in its earnings report for the fourth quarter on Tuesday.
During the reporting period, Genesis’s total outstanding active loans increased 81% to $ 3.8 billion, while loan origination increased 46% to $ 7.6 billion. The average dollar or stablecoin loan size to Genesis doubled from $ 2 million to $ 4 million in the fourth quarter, and the average loan size for first-time lenders on the Genesis platform increased from $ 590,000 to $ 3.2 million. USD.
These results are in line with observations made by economists who have found that institutions are saving more and investors are looking for return in a low interest rate environment that will persist during the pandemic-triggered recession.
“The room is just bigger,” said Genesis CEO Michael Moro. “We will see more and more people shopping for the first time on the spot market, taking out loans for the first time and giving loans. The hope is to continue unleashing more supply and attracting more traditional lenders to borrowing loans into the crypto room to hopefully keep interest rates under control. “
While Bitcoin and Ether continue to make up a larger stake in the loan book, Genesis still saw increased demand for dollar loans, “mainly from market-neutral types of hedge funds and props trading firms, as they continue to be able to broker the spot and the futures market” said Moro. This was in contrast to Genesis’ Q3 report, in which ETH loans rose rapidly after the DeFi madness of the summer.
BTC now makes up around 54% of the pie and Ethereum 15.5%, compared to 40.8% and 12.4%, respectively, at the end of the third quarter. XRP has shrunk from 1.4% to 0.4% of the portfolio after Genesis decided to stop borrowing and borrowing in cryptocurrency following the lawsuit filed by the US Securities and Exchange Commission against Ripple.
In the results report, Genesis asked central banks to include stable coin data in their records. Moro described stablecoins as derivatives of the money supply M1 (M1 contains very liquid funds such as cash, sight deposits and travelers checks; M2 contains less liquid funds such as savings and time deposits, certificates of deposit and money market funds).
“You must have a US bank account to access US dollars,” said Moro. “The advent of stable coins has made it possible for the remote farmer in the middle of India to have USDC if he has an Ethereum address. You’ve made US dollars more accessible worldwide, which I don’t think people thought of. “
Moro predicted that central banks around the world will be cautious if their citizens have easy access to the dollar, and that the US Federal Reserve will avoid having an overly strong dollar, which would create an export / import imbalance when US goods become too expensive to buy in other countries.
“I don’t think you can put the USDC spirit back in the bottle,” said Moro. “Once you complete the USDC route, it is really hard to go back … it literally tells people this fantastic thing, you can’t do it anymore and get back to the bank wires.”
Derivatives rise in the bull market
Genesis’ derivatives trading desk also saw record volumes last quarter. Traders wanted to hedge their risks when they entered the bull market.
Trading in derivatives increased 350% to $ 4.5 billion in total trading volume and spot trading increased 80% to $ 8.1 billion in total trading volume.
“People work directly with us as liquidity providers at CME and several other exchange locations,” said Joshua Lim, head of derivatives at Genesis. “We act as a block liquidity provider because people want bigger jobs.”
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