We’ve all taken out loans at a bank or through a credit card company, but all those loans were in our native currency. Now, picture taking out a loan in crypto… The circumstances would be very different, right? How would one account for volatility?
Getting People the Crypto They Need
That’s exactly what U.S.-based lending firm Genesis does. It lends people cryptocurrency, but there’s a unique twist to their situation. Recently, the company confirmed that it had lent out approximately $1.5 billion in crypto funds over the past year, and most of the borrowers have been institutional in nature. In other words, they’re not standard traders or crypto enthusiasts. They’re the pros of the financial world.
This is interesting because many analysts claim that institutional investors have been very reluctant to get involved in crypto. The main reason is because crypto, as we’ve all seen, is susceptible to price fluctuations and volatility like no other asset in existence. Institutional players are eager to keep their money and stay rich, and don’t like the idea of potentially losing funds as quickly as they invest them, so crypto, for the most part, has been a big “no-no” in their books.
But Genesis Global Trading tells a different story. Since March 2018, the company has lent out nearly $2 billion in crypto funds to institutional players, claiming that their demand for market entry is higher than ever. Some of these players include hedge funds and financial funds looking to short crypto assets. In the first quarter alone, the company lent out nearly half-a-billion in crypto funds, up 15 percent from the same period last year.
The company claims that it currently has roughly $183 million in active crypto loans, with nearly 70 percent of those loans based in bitcoin. The rest involve currencies like ether, XRP (Ripple) and bitcoin cash. Executives also say that since it began operations last year – at a time when crypto-lending was virtually non-existent – seven additional lenders have emerged as digital competitors.
Chief Executive Officer Michael Moro explains:
We expect more new entrants into the marketplace, and lending rates to correspondingly decrease, but since this space is still so new, I think the strong level of growth will continue for quite some time.
USD Is Good; Bitcoin Is Better
Genesis states that in the fourth quarter of 2018, the company also began lending USD as a “pilot program.” Its USD loans now account for roughly ten percent of its overall business and are second in terms of popularity only to bitcoin.
At press time, the father of crypto is trading for about $5,500 – approximately eight percent higher than where it stood during yesterday’s peak hours. Analysts claim bitcoin has reached what’s known as a “golden cross,” and are bullish about its potential future.