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A third-quarter report from Genesis has shown major growths across the crypto space. The report also shows that the behaviour of institutional investors is changing, with most now turning into decentralized finance (DeFi) and altcoins.
The report further shows that the demand for Bitcoin by institutional investors is not as high as it used to be.
The Crypto market is changing
Genesis is a digital assets firm, and it revealed these details during the Q3 Market Observation Report. The report showed that the demand for Bitcoin was fading because institutions were now turning towards DeFi and altcoins.
Moreover, traders were also looking for other opportunities to profit from spreads between BTC’s spot price and the futures market. The report noted that this was caused by “structural change” in the crypto market, where exchanges were limiting leverage offers.
“In Q1 2021, Genesis first noted a significant decline in the weighting of BTC in our overall portfolio due to the relative lack of BTC-denominated trading opportunities. While this paused in Q2, it resumed over the third quarter due to the continued GBTC premium inversion and flattening of the basis curves,” the report read.
The report adds that Bitcoin has become less attractive to short term traders because the primary cryptocurrency has become more institutionalized.
Institutions turning to DeFi
The report further noted that many institutions were turning towards the DeFi space. The demand for Ether was also high, as institutions were using the asset to borrow and lend across DApps.
Institutions were also increasingly becoming interested in emerging layer one protocols. This has contributed to increased demand for altcoins during the third quarter of 2021. One emerging platform that has seen increased interest is Solana, which hit a new all-time high last week.
While the demand for Bitcoin was fading, the report noted that the highly anticipated US Bitcoin futures exchange-traded fund revived the market, with institutions such as investment banks and asset managers showing great interest in this Bitcoin product. The Genesis Q3 report shows that 61% of the firm’s over-the-counter (OTC) trading activity had increased by 47% compared to Q2.
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