Genesis, a global digital asset trading, derivatives, custody, and prime brokerage services provider, has published its Q2 Earning Report on Wednesday with interesting insight into the crypto markets.
The report shows that the company’s crypto lending output has declined, while OTC trading has risen.
Genesis stated that it issued new loans of $40 billion in its second quarter. This is a decrease by 9% compared to the first quarter. The reason for this was because cryptocurrency lending has been in decline in recent months. The majority of such loans were made in April and may, when the crypto market capization fell more than 40% to $2.2 trillion from $1.3 trillion.
Genesis stated further that active loans outstanding fell 66% to $4.9 billion during the second quarter, from $14.6 billion the previous quarter.
The company said its spot desk traded more than $17.2 billion OTC (over-the-counter trading) in the second quarter, an increase of over 51% quarter-over-quarter.
Genesis also mentioned that the derivatives desk had traded $26.6 billion in nominal value during the same period. This is a decrease by 4% over the first quarter.
The firm revealed that Bitcoin 56% contributed to the traded volume. This is more than the 48% recorded in the first period. The firm said while its BTC loan weight increased from 28.7% to 30.4% quarter over quarter, its Ether’s weight declined from 16% in the first quarter to 11.4% at the end of June.
Lending businesses are getting squeezed
Recent volatility and extreme falls in valuations have put crypto markets under severe pressure. Genesis had significant exposure to Three Arrows Capital (3AC), a crypto hedge fund firm, which became bankrupt because of excessive leverage. Genesis was lucky that Digital Currency Group, its parent company, took over the losses and transferred the assets to their balance sheets, leaving Genesis unaffected by the catastrophe.
Genesis reported that its balance sheet was strong in June. The Genesis lending business continues to meet customer demand, just days after Celsius Network, another lending company, stopped client withdrawals because of difficult market conditions.
Voyager Digital and other crypto lending companies such as Vauld, Hodlnaut and Zipmex stopped withdrawals and transfers during that month due to “extreme market conditions”. These firms’ tragic actions triggered the recent market collapse and led to warnings from U.S. regulators regarding crypto lending platforms.