Even in a bearish market, Genesis Global Trading, an over-the-counter virtual currency broker, has announced today Thursday 18th that it has already facilitated more than $550 million in loans to institutions.
The cryptocurrency lending company facilitates loans to institutions with collateral being cryptocurrencies. Its business model, which was launched in March, was informed by a gap that was created after a considerable “increase in the number of market participants wanting to borrow and/or lend digital currencies.”
On the lending front, Genesis deals purely with hedge funds, trading firms, “and companies that use digital currencies as working capital.”
While hedge funds seek loans to short for prolonged periods, trading firms use the loans to address discrepancies with the aim of avoiding “directional risk.” Companies seek loan services from Genesis to “scale their business.”
As of present, the cryptocurrency lending firm has the amount held in active loans to $130 million. According to Genesis, bitcoin loans are more popular. Over the last few months, ethereum loans went down probably due to the drop in the price of ethereum.
In the third quarter of 2018, XRP loans appreciated from 5.6% in Q2 to 17.8% in Q3. LTC and BCH loans have also recorded notable improvements in Q3 as compared to Q2.
Between the institutions involved with the cryptocurrency lending company, “working capital drove the majority of loans” in Q3 but hedge funds took over “on the short-side”
“Trading firms also saw increased opportunities for arbitrage and market-making as derivative liquidity increased across markets. These firms generally borrow digital assets to trade against derivatives like futures and swaps,” noted a post on Genesis’ website.
The company is confident that this “kind of activity will continue to pick up as derivative markets mature”
Do you also think that using cryptocurrencies as collateral in loans will increase as the market establishes itself?