Report: Strong activity underscores institutional interest across digital assets

Original author: Laszlo Dobos

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American digital currency prime brokerage Genesis released its Q4 2021 Market Observations Report, which provides detail on the company’s results and market indicators over the past quarter and the whole year of 2021.

Per the report, the digital asset market saw strong growth during 2021. This growth highlights major trends across institutional digital asset markets, including the continued diversification of digital asset investments, the deepening sophistication of institutional investors entering the crypto market, as well as new types of institutions participating in the market and increasing allocations from managers of diversified portfolios.

Q4 2021 marked Genesis’ strongest quarter to date, according to the report, with approximately $102 billion in transactional volume, resulting from a year of significant growth across all of the company’s business lines.

Growth driven by increasing institutional participation

Key highlights from last year’s result show that loan originations reached $50 billion, up 40% over Q3 2021. Loan originations for 2021 totaled $131 billion, nearly seven times higher than 2020.

Spot trading volume totaled $30.8 billion, up 23% from Q3. For the full year 2021, Genesis’ spot trading volumes increased nearly six times over 2020 to $116.5 billion. At the same time derivatives, notional volume traded was $20.7 billion during the quarter, an increase of 62% compared with Q3. Total notional value traded for the year grew to $53.8 billion, more than nine times over 2020, and the number of onboarded custody clients grew 53% from the previous quarter.

“2021 was a pivotal year for the crypto industry, and one that demonstrated the merits of smart tactical trading around a core position,” said Michael Moro, CEO of Genesis, commenting on the report.

“As this asset class continues to mature, driven by increasing institutional participation and growing regulatory clarity, we believe that taking a comprehensive approach to portfolio management will only become more important, and we look forward to achieving new milestones on behalf of our clients in 2022.”

$150 billion in cumulative crypto lending originations

According to the report, Genesis’ lending desk remains the largest crypto lender in the industry and finished the year with over $150 billion in cumulative originations since its launch in March of 2018.

Genesis executed $50 billion in new originations in Q4, a 40% increase from the previous quarter. Active loans outstanding climbed to $12.5 billion to close the quarter, up 12.3% from Q3. Loans outstanding peaked at over $16 billion in mid-November before seeing a wave of year-end deleveraging as prices on most cryptocurrencies fell.

Over the quarter, the lending desk saw that while demand from clients engaging with DeFi platforms is still strong, the focus has shifted towards layer-1 alternatives, resulting in slightly higher originations in those coins.

First-ever ETH micro futures

Genesis saw another record quarter in derivatives trading activity with $20.7 billion in notional value traded globally, a 62% quarter-on-quarter growth and a 360% increase over Genesis’ results in Q4 2020.  This brings trading activity for 2021 to $53.8 billion in notional volume, an 812% increase over 2020. In December, Genesis also printed the first-ever ether (ETH) Micro futures trade on the CME and was the number one in market share for blocked bitcoin (BTC) and ETH exchange-cleared options via Paradigm, with over $1.5 billion traded.

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