Genesis Reports Continued Growth in Demand for ETH Compared to BTC in Q3

Solana, Terra, Avalanche and Fantom among the layer-1s challenging Ethereum.

article-image

Source: Shutterstock

share

key takeaways

  • Ethereum loans increased to 32% of Genesis’s total book, up from 27.9% during the second quarter
  • Incentive programs have catalyzed cross-chain activity, leading to a reduction of ETH’s market share in favor of competing layer-1s

The third quarter was marked by traditional finance moving into crypto, a market rotation into layer-1 tokens and growing institutional interest in DeFi, according to a report published by Genesis on Thursday. 

The New York-based company’s loan originations reached $35.7 billion, a company record that was up over 586% year-on-year and represented an increase of 40% versus the prior quarter.

While bitcoin loans increased overall, the composition of the loan book continued to rotate. BTC loans accounted for 32.4% of outstanding loans, down from 42.3% at the end of the second quarter, while ETH loans increased to 32% of the total book, up from 27.9% in Q2.

It was the first time ETH loans reached more than 30% of Genesis’ total loan book, according to Genesis Market Insights Head Noelle Acheson, who pointed to a trend of greater borrowing appetite in ETH from institutions to post as collateral or liquidity pairs across DeFi applications.

“BTC continues to function as a gateway asset, but we are seeing institutional investors express growing interest in diversifying their crypto portfolio,” she told Blockworks. “We expect this interest in greater diversification and demand for ETH to continue.”

Though interest from crypto-native institutions has shifted away from bitcoin to Ethereum and DeFi tokens, the listing of the first bitcoin futures ETFs last month served as a catalyst for the widening of the BTC basis, the Genesis report states. This could continue as more organic flow from traditional institutions, 401(k) accounts and registered investment advisors enter the market, it adds.

The third quarter also brought the acceleration in the development of emerging layer-1 protocols, both in terms of technology and community, Acheson noted. 

While layer-1s compete on transaction speed and security, incentive programs have sparked cross-chain activity, leading to a reduction of Ethereum’s market share in favor of competitors such as Solana (SOL), Terra (LUNA), Avalanche (AVAX) and Fantom (FTM), the report states.

Avalanche announced in August a $180 million liquidity mining incentive program that brought DeFi protocols Aave and Curve to the Avalanche public blockchain.

Rotation into these protocols outpaced the market capitalization gains of Ethereum alternatives such as Binance Smart Chain (BSC), Polkadot (DOT) and Polygon (MATIC) seen during the second quarter, the research adds.

“Over the next few months we’re excited to see how development across the ecosystem can support progress on individual blockchains as well as the interplay between them, offering new opportunities for diversification and attracting new types of investors into the crypto markets,” Acheson said.

The report comes as Ethereum reached an all-time high above $4,600 on Wednesday. The asset’s price had fallen to 4,517.75 as of 5 pm ET on Thursday, according to CoinGecko.

Mikkel Morch, executive director at crypto hedge fund ARK36, noted that Ethereum has now outperformed bitcoin almost five times in terms of year-to-date returns.  

“As this current bull market is heating up and as DeFi and NFTs continue to enter the mainstream ever more decisively,” he said, “Ethereum seems to be on a path to a double digit price tag within the next few months.”

Tags

    Upcoming Events

    Salt Lake City, UT

    MON - TUES, OCT. 7 - 8, 2024

    Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

    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

    AERODROME TEMPLATE.png

    Research

    Aerodrome is a "MetaDEX" that combines elements of various DEX primitives such as Uniswap V2 and V3, Curve, Convex, and Votium. Since its launch on Base, it has become the largest protocol by TVL with more than $495M in value locked, doubling Uniswap's Base deployment.

    article-image

    Plus, all the world is green as prices across the crypto space rally, with solana reaching a nearly two-week high

    article-image

    Investors add to crypto positions after “turnaround in sentiment due to lower-than-expected CPI,” CoinShares research head says

    article-image

    Plus, Ethereum is in the midst of a vibecession

    article-image

    Also, former Valkyrie CEO lands new leadership role at Canadian investment firm Cypherpunk Holdings

    article-image

    This week’s biggest funding round saw Jump Trading, JPMorgan contribute to the round

    article-image

    Plus, a layer-1 for intellectual property is launching and Farcaster users peaked