Genesis Generated Over $1.1 Billion In BTC, XRP and ETH Loans Despite Falling Cryptocurrency Market

Italian Cryptocurrency Exchange, BitGrail shuts down almost immediately after it re-opened

Ever since they reached their all-time highs, the price of cryptocurrencies have fallen significantly against the USD. This price fall affected the market but it did not hinder innovation. Many companies made money during the cryptocurrency winter even as some others shutdown. One of these companies that succeeded amid the storm is Genesis. The company made money by lending money to interested parties.

Genesis Global Capital Generates $1.1 Billion Amid Cryptocurrency Winter

According to a report, the cryptocurrency loan shark made up to $1.1 billion from interests last year. The company is one of the few that has continued to generate cash rather than record losses during a bear market. Michael Moro, the CEO of the company said:

“People should be able to go long and short in BTC trading. It shouldn’t just be a long-only market. It should be okay to go short as well when you put price volatility into consideration.”

In March 2018, Genesis announced that it had made $500 million in loans. In December 14th 2018, the company crossed the billion dollars in BTC loans milestone. This means that the company made $500 million within the last three months of the year. During the last two months of the year when BTC fell by more than 39%, Genesis serviced so many firms that wanted loans.

Bitcoin (BTC) Price Today – BTC / USD

#NamePrice24H %
1
bitcoin
Bitcoin(BTC)
$7,933.19
-2.07%

The interest rates by the company range from 10% to 12% depending on the risks attached to the loan. Less liquid cryptocurrencies attracted higher rates. In November 14, right after BTC fell by 14%, the company noticed an increase in loan requests. One long time customer of Genesis and cryptocurrency investor, Brian Kelly, said that this kind of activity is essential to the cryptocurrency industry. He believes that a two sided market increases liquidity.

Which Companies Requested The Loans?

According to the report, 11% of the BTC loans were used by investors to bet against the price of BTC rising. About 50% of the loan request was from firms that need short-term possession of BTC like bitcoin ATM companies. This was followed by people engaging in arbitrage trading. Arbitrage trading is a strategy that involves buying an asset on one exchange and selling it at a higher price on another exchange to make a profit.

Most of the loans were in BTC. It accounted for up to 75% of all the loans. The second on the list was ETH which accounted for 10%. Even if the percentage of loans in ETH doubled in the last quarter of the year, it still didn’t come near BTC. The number of loans for other cryptocurrencies apart from the top three has decreased since the third quarter of the year.

In the fourth quarter of 2018, the loan portfolio of the company was 60% in BTC. Of the remaining 40% in altcoins, up to 50% was in XRP. Before the last quarter of the year, 98% of all the loans were used for things like arbitrage, remittance and basis capture.

Why do you think the number of cryptocurrency loans increased as prices fell against the USD? Share your thoughts in the comment section.

Max writes about blockchain projects and regulation with a special focus on United States and China. He joined Smarterum after years of writing for various media outlets.

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