Genesis Capital, the OTC cryptocurrency lending company lent out over $1.1 billion in cryptocurrency loans in 2018 as indicated by their Digital Asset Lending Snapshot for the fourth quarter of the year.
At the end of the third quarter, the total loan originations amounted to $500 million and saw an increase of more than 100 percent in just one quarter as the market meltdown ensued.
Despite the “Crypto-Winter” in which Bitcoin [BTC] fell from a January high of $17,000 to a December low of under $3,200 and the overall market cap was slashed by over 87 percent, lending and borrowing in cryptocurrency stayed firm.
The final two months of the year, when the crypto-winter saw its worst storm, hedge funds and trading firms used their “spot borrow”, which saw the loan figure rise to $153 million, an increase of $20 million from the previous quarter, according to Genesis.
Fiat currency lending was also introduced in the final quarter by Genesis. They mentioned that there was an increase in demand for lending in USD and other fiat currencies by their institutional clients.
The report stated:
“Long-term digital currency investors with appreciated assets can borrow cash against their crypto holdings without triggering a taxable event.”
In terms of cryptocurrency share in the loan pool, it bears no surprise that Bitcoin [BTC] comes in with about 75 percent of the entire portfolio share. Following up is Ethereum [ETH], which despite doubling its share from the previous quarter value of 3.7 percent to 8.1 percent, it still accounts for a small share.
The XRP share has declined by 50 percent since the previous quarter, despite the relatively better market performance compared to its peers. XRP stands at 8.6 percent, after a Q3 share of 17.8 percent, more than BCH, ETH, ETC, and LTC combined.
Bitcoin Cash [BCH], which hardforked in November 2018 has plummeted to 0.4 percent from a previous quarter high of 3.5 percent.
In light of the BCH decline, the report stated:
“Bitcoin Cash (BCH) borrowing has dwindled to nearly zero as we called most of our outstanding loans prior to the hard fork on November 15th. Managing forks is a precarious process when lending digital assets, and though we define specific hash rate, liquidity, and market cap parameters for delivering a forked coin, both borrowers and lenders generally prefer avoiding carrying balances through contentious hard forks.”
Michael Moro, the CEO of Genesis Capital, said that cryptocurrency lenders have fared better than the rest of the industry despite the plummeting prices. Given the success of this industry, several new players are entering the fray with Mike Novogratz’s Galaxy Digital announcing plans to raise $250 million for loans to cryptocurrency companies.
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