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Bitcoin demand is trending down as institutions switch to DeFi and altcoins, Genesis says

Digital assets company Genesis recently released its Q3 Market Observations Report, which highlights some of the key trends in the market. This time around, it shows that demand for bitcoin had subsided in the third quarter as institutions examined DeFi platforms and altcoins.

BTC demand is trending down due to institutionalization

According to the report, BTC demand trended lower in the third quarter as there were no opportunities for traders to benefit from the spreads between the BTC price in the spot and futures markets.

The company noted a “significant structural change” in the crypto market, which began with the deleveraging of the retail exchanges. During the second quarter, we saw several exchanges restricting their leverage offerings, such as:

“In the first quarter of 2021, Genesis saw a significant decrease in the weighting of BTC in our overall portfolio for the first time due to the relative lack of trading opportunities denominated in BTC. While this paused in the second quarter, it resumed in the third quarter due to the ongoing GBTC premium inversion and the flattening of the base curves. ”- reads the report.

The “deleveraging of retail exchanges,” according to the report, together with the Chinese crackdown on crypto, led to a shift towards institutionalization in the industry, which made Bitcoin less attractive to opportunistic traders.

Institutions that use DeFi – ETH is the favorite

The company highlighted the growing number of institutions coming into the DeFi space. The document reported a greater  -petite on the part of ETH institutions to borrow and lend loans through multiple decentralized  -plications (D -ps).

Emerging Layer-1 protocols also saw a surge in interest, with various crypto-native institutions investigating return opportunities in L-1s that offered attractive prices on stablecoins and ETH / BTC pairs. This led to a price increase for Altcoins that continued to gain ground in the third quarter. One of The top winner is Solana (SOL), who beat Cardano (ADA) after a new all-time high this week.

“In addition to the increased interest in ETH lending during the quarter, altcoins (alts) – and especially L1 alternatives – saw a surge in demand and served as natural liquidity pairs for DeFi return opportunities.”

Despite the lack of interest in Bitcoin, anticipation of the first futures-linked Bitcoin ETF in the US revitalized the market, with traditional financial institutions such as investment banks and asset managers valued at + $ 100 billion showing strong interest in the product.

In total, Genesis traded over $ 37 billion in derivatives and commercials in the third quarter. BTC accounted for about 61% of Genesis’ over-the-counter (OTC) trading activity, up 47% in the second quarter.

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