Interest from institutional investors in lending and borrowing cryptocurrencies is on the rise, according to Genesis Global Capital.
According to a third quarter report, the company has facilitated more than half a billion dollars in loans, of which more than $ 300 million has been loaned to investors both as a hedging tool and as leverage to increase their bets. against digital currencies.
âAt the start of the quarter, working capital was the source of the majority of loans. In September, however, hedge funds became more active in the short term and increased their long term speculative positions, âsaid the company, a subsidiary of Genesis Global Trading Inc.
Michael Moro, CEO of Genesis Global Trading, said a common working capital requirement is bitcoin BTCUSD,
ATMs. âThey need to have bitcoin in a hot wallet, but they don’t want the price risk associated with holding them, so when a customer buys from an ATM, they will immediately redeem it from Genesis,â a- he declared. A hot wallet is a wallet that is connected to the Internet in some way and is readily available for paying or receiving cryptocurrency, as opposed to cold stored cryptocurrency.
Cryptocurrency borrowing has become increasingly popular as punters seek to double their crypto bets. However, to the company’s surprise, crypto bears avoided Ether, ETHUSD,
one of the worst performing digital currencies this year. âOur data shows that these are natural holders, not short sellers,â Moro said.
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Bitcoin makes up 50% of the company’s loan portfolio, and depending on counterparty and credit risk, it will cost around 12% per year to borrow bitcoin. However, while lenders are happy to hand over their crypto for about a year, borrowers operate on a much shorter time frame. âPeople looking to sell bitcoin usually have a price target and will often only hold the position for four or five days,â Moro said.
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The report comes just days after Fidelity Investments announced it had launched a cryptocurrency business to serve institutional and sophisticated investors, illustrating growing interest across the investment spectrum – a trend that has been in play for some time. , according to Moro.
âIn the funds space, it’s not just about crypto-specific funds, we’re also seeing a lot more mainstream financial firms borrowing bitcoin.â
Read:Fidelity launches cryptocurrency trading platform