Crypto Brokerage Genesis Reports Q1 Lending Decline as Market Slump Continues

As the market sell-off continues, bitcoin is playing a smaller role in institutional portfolios, the company said

article-image

blockworks exclusive art by axel rangel

share

key takeaways

  • Genesis reported $44.3 billion in originated loans during the first three months of 2022
  • Institutional investors are becoming less interested in bitcoin, the report noted

Institutional investor cryptocurrency brokerage Genesis reported $44.3 billion in originated digital asset-backed loans during the first quarter, a decline from the previous quarter’s $50 billion. 

The decline is due to a large sell-off across all cryptoassets, Genesis wrote in a first quarter earnings report Friday. Valuations across the space are nearly half of what they were in November, the report added. 

Genesis’ lending business focuses on lending to crypto funds and other institutions for hedging investments or shorting digital assets. The brokerage has issued $195 billion in loans since the launch of the lending platform in 2018. 

Despite recent volatility, new institutions entering the market have shown strong demand for cash loans this past quarter, Genesis said. 

“Institutions continue to develop their crypto strategies and strengthen their understanding of this industry, even amid the market uncertainty that has marked the start to this year,” CEO Michael Moro said in a statement. “As we continue to deepen engagement with our clients across Genesis’ wide range of products, we are committed to further expanding our market share and delivering innovative strategies for clients to access this growing asset class.”

Genesis’ trading desk grew during the first quarter of the year. The notional derivatives volume — including negotiated block- and exchange-traded futures — traded reached $27.8 billion during the quarter, up 33% from the fourth quarter of 2021. 

Investors are becoming less interested in single-asset portfolios, especially when it comes to bitcoin, Genesis said in the report. 

“Since the middle of last year, we noted a macro trend occurring in which BTC was gradually becoming a smaller proportion of our portfolio mix,” the report said. “Many clients are also focused on [decentralized finance] funding opportunities in these native layer-1 blockchains, sometimes offering more attractive rates than in typical ETH blockchain protocols.” 

A possible explanation: There is little opportunity in bitcoin cash and carry basis trades, as the three-month trailing and three-month basis compressed in the first quarter, the report said. The same trend can be observed in ethereum basis trades, which used to trade at a slight premium to bitcoin.


Don’t miss the next big story – join our free daily newsletter.

Tags

Upcoming Events

HYATT REGENCY SALT LAKE CITY

TUES, OCT. 8, 2024

Guided by the expertise of Blockworks Research Analysts team, this one day event will feature senior leaders, entrepreneurs, and developers from across the crypto industry. Attendees will have the opportunity to participate in an immersive experience to explore the latest trends, […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

hivemapper.jpeg

Research

We believe crypto market participants overlook Hivemapper’s fundamental potential due to a poor understanding of both the niche map data market and Hivemapper’s positioning relative to incumbents. Hivemapper’s token model catalyzes both a cost and product advantage via unmatched map freshness and near real-time accuracy, which is its wedge into a market characterized by stale data and high data collection costs. Its current and potential future product suite may represent one of the strongest possibilities for PMF in crypto today.

article-image

The Department of Justice and Commodity Futures Trading Commission announced back-to-back lawsuits against KuCoin Tuesday

article-image

Judge Failla found that Coinbase didn’t operate as an unregistered broker in offering its wallet service

article-image

A fund by Laser Digital offers investors exposure to the Polygon network, while a new 21Shares ETP focuses on staking rewards from Toncoin

article-image

Sponsored

The TRON network’s integration into Dune brings a wealth of data and insights to the fingertips of users

article-image

A BTC futures fund offered by Hashdex and Tidal Investments has gotten regulatory clearance to hold bitcoin directly

article-image

At launch, Chain Signatures will be compatible with Bitcoin, Ethereum and Cosmos network chains, as well as DogeCoin and XRP Ledger