The Q3 Market Observations Report by Genesis, a digital assets company, has been published recently. It highlights the main trends in the market. It shows that bitcoin demand has declined during Q3, as institutions are exploring DeFi platforms, and other altcoins.
BTC Demand is falling due to institutionalization
According to the report, BTC demand declined during Q3 because traders didn’t have the opportunity to profit from spreads between spot and futures prices.
The firm observed a “significant structural shift” in crypto markets, beginning with deleveraging retail exchanges. We saw many exchanges reduce their leverage offers during Q2, such as Binance, which reduced the maximum levels to 20x for accounts that were opened within 30 days.
Genesis noticed a decline in BTC’s weight in its overall portfolio in Q1 2021. This was due to a lack of BTC-denominated trading options. This trend halted in Q2 but resumed in the third quarter, owing to the flattening basis curves and continued GBTC premium inflation.” – The report.
According to the report, the “deleveraging” of retail exchanges and the Chinese crackdown on cryptocurrency led to institutionalization, which made Bitcoin less appealing to opportunist trader.
Institutions adopting DeFi – ETH is The Favorite
The firm highlighted the increasing number of institutions moving into the DeFi space. According to the document, institutions are more willing to lend and borrow across multiple decentralized applications (DApps) than they were before.
The interest in emerging Layer-1 protocols saw a surge, as many crypto-native institutions explored yield opportunities across L-1s that offered attractive rates for stablecoins or ETH/BTC pairs. Altcoins saw a rise in their prices, which continued to grow in Q3. Solana (SOL) is one of the top gainers, surpassing Cardano (ADA), after a new all time high this week.
“Alongside a higher interest in ETH loan originations throughout the quarter, altcoins, and especially L1 alternatives, saw a surge in demand, serving to serve as natural liquidity pairs in DeFi yield opportunities.
Despite the lackluster interest in bitcoin, anticipation of the US’s first futures-linked Bitcoin ETF resurrected the market. Traditional financial institutions like investment banks, asset managers and +$100 Billion worth of assets showed strong interest in this product.
Genesis traded more than $37 billion in derivatives and spot trading during Q3. BTC accounted roughly for 61% of Genesis OTC (over the counter) trading activity, an increase of 47% in Q2.
Marla Brooks – Financial Analysis
My name is Marla Brooks, and I am the mainstream behind the”observednews.com” for the powerful and most delicate insights into the latest activities in the financial analysis category. I started my journey as an independent financial consultant. I had approximately nine years of experience in this field. I am free soul so; my passion for exploring the world has taken me to the nations across the globe and given me the chance to report for a portion of the best news associations. Currently, I am a full-time editor as experienced in finance and started to use my abilities.