Genesis Capital said Tuesday that its total number of loans outstanding more than doubled to $1.4 billion for the second quarter to June, up from $649 million three months earlier.
The crypto lender, which targets institutional investors and wealthy individuals, added over $2.2 billion in new originations, an increase of 324% year-on-year.
Since the launch of the business in March 2018, Genesis has originated nearly $8.4 billion in loans, the bulk of which are denominated in bitcoin (BTC) and cash.
For the review quarter, BTC loans increased, accounting for 51% of the loan book total and fiat 32%. Cash-based loans have actually been in decline, falling from 36.6% the previous quarter.
The decline may be the result of low volatility seen in the spot price of bitcoin during the April to June period, which made borrowing cash to buy crypto less profitable.
Genesis’ second quarter performance represents a major rebound from the coronavirus-induced crash in the price of bitcoin in March, which badly hit the business. The growth is a feat that may not be repeated.
“To think that our loans outstanding would grow by over 100% in just three months going forward is probably unrealistic,” Michael Moro, chief executive officer of Genesis, was quoted as saying by industry media.
Most of the funds that Genesis provides as loans are borrowed from elsewhere – such as from wealthy individuals and asset managers – at interest rates of between 6% to 12%.
The company then goes on to charge a certain premium when it lends to corporate borrowers such as hedge funds and trading firms, looking for arbitrage, mainly to short crypto. Lately though, a new hype is driving borrowings. Moro, the CEO, observed:
There was an unprecedented desire for digital currency yield generation in the form of spot lending, call option overwriting and liquidity mining on DeFi protocols. This all signals that market participants are seeking varying, rigorous methods to generate yield that correspond with their risk appetites.
On the spot side, Genesis traded $5.3 billion in second quarter volume, up from $4 billion in the preceding three-month period. The majority of the flow was traded over-the-counter, with the rest reaching exchanges.
The firm’s derivatives trading desk, which was launched in May, traded $400 million forwards and options, with nearly 50 active counterparties across 10 different assets. About 67% of the trading volume was executed bilaterally and the remaining 33% was executed on exchanges.
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