There is a strong correlation between currency price changes and lending activities.
In the past year, with the rise of the derivatives market, the development of encryption and lending has flourished.
On April 25th, the first quarter lending snapshot (Lending Snapshot) released by agency-based encryption loan company Genesis Capital not only revealed that it had borrowed $1.53 billion since its launch of the cryptocurrency loan business in March 2018. Some interesting data and analysis.
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1. The scale of borrowing continues to expand
In the first quarter of this year, the company's total loan loans reached US$425 million, an increase of 15% from the end of 2018. In addition, since the third quarter of 2018, the cumulative loan amount has almost tripled, the total outstanding loan has increased by more than 40%, and reached $180 million at the end of the first quarter of 2019. Genesis said that as market makers and high-frequency trading companies enter the market, "BTC's continued lending demand" is promoted and this trend is expected to continue in 2019.
2. Bitcoin is the most favored lending currency, and the French currency is a rookie.
In the first quarter of 2019, bitcoin loans accounted for 68%, XRP loans accounted for 6.7%, and ETH and LTC loans each accounted for 3.6%. Among them, since 2018, the ratio of Bitcoin to US dollar borrowing has been rising. US dollar borrowing is a new business launched by Genesis at the end of 2018. Although it is still in the pilot phase, it currently accounts for 10% of the loan ratio.
3, bitcoin short interest decline
Michael Moro, CEO of Genesis Trading and Loan Business, said bitcoin shorts now account for only 3% to 5% of Genesis' total bitcoin loans, down from about half of the beginning of 2018. In addition, in the third quarter of 2018, “XRP's short trading volume was large”, but this trend gradually weakened before the end of the year and has not resumed until 2019.
But like Ethereum and Litecoin, the interest in shorting is still unabated.
4. There is a strong correlation between some currency price changes and lending activities.
In this report, Genesis shows a clear correlation between price changes and corporate customer borrowing activity. The chart shows that as the price of Ethereum and Litecoin declines, the total amount of loans rises, and as the price rises, the more loans are repaid. But for Bitcoin, so far, there is little correlation between loan volume and price in 2019.
Take Ethereum as an example here. Among them, “Prominence of ETH Loans” refers to the number of ETHs for the loan of the day/the highest number of ETHs for the first quarter loan. When the price of ETH was 100 US dollars at the beginning of February, the short position of ETH increased sharply, and the outstanding loan was in the present. The quarter reached its highest level. After the price rose to $120 on February 7, the bears fell by 30%. A week later, the price rose again to $140, and a lot of shorts were squeezed out.
On the contrary, before March 20 to April 2, that is, before the rise to the level of 180 US dollars on April 15, we saw a short margin of 33%, which means that borrowers predict the market to rise and reduce short positions in time. . As the price continued until April 15, the bears continued to fall and closed at the lowest level of the year-to-date.
5, in and out
Genesis currently mainly lends to exchange and off-exchange (OTC) trading departments, which tend to keep customers' funds in a frozen or offline state, and then use the borrowed cryptocurrency for transaction settlement, mainly used in the fast arbitrage market. The difference.
In addition, clients of legal currency lending are often hedge funds who want to receive some additional operating cash without using client funds. They offer 120% encrypted collateral, and if their legal value is less than 105%, they will be margined.
Moro said that Genesis also borrowed from large investors, including some early Bitcoin investors. The company borrows at a rate of 4% to 5% and borrows at a rate of 6.5% to 7.5%; interest is paid in cryptocurrency.
Genesis does not have a cold wallet for cryptocurrencies, and Moro says that once the borrower repays the encrypted coins, the coins are loaned from the hot wallet to another customer as soon as possible.
Cointelegraph previously reported that lenders in the cryptocurrency industry have survived the recent crypto bear market better than other industries. Moro once said: "The bear market has certainly helped, at least boosted growth."
The current encrypted lending track has become crowded. In addition to the old and large-scale Genesis Capital, Salt, and Nexo, emerging encryption lenders are also flooding. For example, the recent online deposit income account has attracted $25 million in just two weeks. Blockfi for deposits, Acre, which received £5 million in investment in April, and cryptocurrency exchanges that launched lending operations are all joining the competition.
Moro believes that the popularity of encrypted mortgages and legal currency loans is enhanced by the reluctance of investors to abandon the idea of holding cryptocurrencies and the general maturity of the cryptocurrency market.
Original article, author: aloe.
Source: Planet Daily; violation of laws and regulations must be investigated.