Bitcoin demand trends 'downwards' as institutions move into DeFi and 'blue chip' alts, says Genesis

The further institutionalization of bitcoin has made it less attractive to more opportunistic traders, according to Genesis' most recent quarterly report. 

The report, which covers activity across the firm's lending, trading, and custody businesses, noted that bitcoin demand trended downward because of a drop in opportunities for traders to profit from market inefficiencies. 

"While this paused in Q2, it resumed over the third quarter due to the continued GBTC premium invasion and flattening of the basis curves," the report said. 

To be clear, Genesis did note that interest in the futures-based bitcoin ETF was strong in the traditional finance world, with a number of global investment banks and $100 billion asset managers relying on Genesis as a CME futures liquidity provider. 

At the same time, the opportunity to cash in on spreads between the price of bitcoin in the spot and futures market has "declined significantly" due to this "shift towards institutionalization," per Genesis.


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Meanwhile, the firm reported an increase in activity in the decentralized finance market as well as in other burgeoning Layer 1s. To meet that demand, Genesis launched new bilateral options in cryptocurrencies like Solana, Luna, and dYdX's native token. 

"While the alt rotation playbook reverted back to deploying capital towards BTC and ETH towards the end of Q3, the adoption of L1s opened up more opportunities to diversify portfolios," the firm said. 

In total, Genesis traded more than $37 billion across derivatives and spot in Q3. 

Source: Genesis Q3 report

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