Genesis: Corporates Account for $8B in Spot Trading in Q1

The digital asset prime brokerage Genesis processed $31.5 billion in spot trading volume in the first quarter of 2021 – $8 billion of which was traded by corporates, the company told Blockworks Wednesday. 

Its overall trading volume showed a 287% increase from the previous quarter, according to its first quarter Market Observations report, released today. That change was largely motivated by the launch of the company’s Treasury product in January, which helps corporates enter the digital asset market. 

Digital asset legitimacy

The activity by corporates demonstrates the increasing legitimacy of digital assets, which may not yet be a reserve asset class. However, it is something institutions are becoming more comfortable storing value in, Josh Lim, Genesis head of derivatives, told Blockworks.

“The thesis is that the dollar is an inflationary currency and [bitcoin] is an inflation hedge,” he said. “Owning bitcoin in some fraction of their total reserve assets is a bit of a hedge. A lot of the discussions that we have with corporate treasury accounts and counterparties center around that.”

Genesis Treasury helps treasury executives interested in adding bitcoin to their balance sheet and using return on equity, liquidity and yield as tools to improve their companies’ overall financial performance.

Among its top 100 largest clients by OTC volume traded, volume from corporates increased to more than 25% of total activity. The surge came both from clients taking their first positions in bitcoin as well as existing clients adding to their position.

Digital asset adoption

Over the first quarter, the trend of corporate treasury reserves and merchant adoption of digital assets has accelerated. Today, Japanese mega-gaming company Nexon announced it had purchased $100 million in bitcoin. Previously, Tesla bought $1.5 billion and has begun accepting cryptocurrencies for purchase payments. MicroStrategy completed another $1 billion offering of convertible notes to fund bitcoin purchases. The Chinese app company Meitu purchased $50 million in cryptocurrency as part of a board-approved investment policy.

For many clients it makes sense to be earliest to something they view as fundamental to the long-term evolution of the sort of monetary landscape, Lim said.

“For most of our counter-parties it was a considered decision based on a macro thesis,” Lim said. “It was something that has been in the works for quarters, thinking about if it was possible to do this sort of allocation, getting the right mandates in place – it wasn’t necessarily a speculative bet.”