One Crypto Sector Is Getting the Attention of Institutional Capital, According to Digital Lending and Trading Firm


Digital currency prime broker Genesis says that institutional investors are starting to move into one crypto sector.

Genesis says in a new report that the firm saw greater demand for leading smart contract platform Ethereum (ETH) during Q3 as its institutional clients engaged with decentralized finance projects.

“With rising adoption on DeFi platforms, Genesis saw greater borrowing appetite in ETH (and sometimes BTC) from institutions to post as collateral or liquidity pairs across DeFi applications.”

According to Genesis, Ethereum accounted for 32% of its loan book in Q3, representing a 106% surge from 15.5% at the end of 2020.

The digital lending and trading firm adds that, alongside Ethereum, demand for the US dollar also spiked last quarter.

“BTC, ETH and USD are currently each almost one-third of our loan portfolio. This may point towards a persisting trend where BTC basis opportunities are less attractive, where ETH and USD demand (especially in DeFi) outpace and could potentially become the primary allocation of our loan portfolio.”

Genesis also notes that market interest in layer-1 projects spiked during the third quarter.

“While layer-1s compete on transaction speed and security, incentive programs have catalyzed a storm of cross-chain activity, leading to a reduction in ETH’s (Ethereum) market share in favor of layer-1s including Solana (SOL), Terra (LUNA), Avalanche (AVAX) and Fantom (FTM).”

As for Bitcoin, Genesis says BTC’s weighting in the firm’s overall portfolio declined in Q3, something the broker attributes to the “continued [Grayscale Bitcoin Trust] premium inversion and flattening of the basis curves.”

Read the full report here.

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