Genesis Capital's loan book continues to surge as they originated $2 billion in Q1 nearly doubling their prior high from last quarter Most of this leverage came from traders capitalizing on a lucrative basis trade from an abnormally steep futures curve

1:04 PM · Apr 30, 2020

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But when the great deleveraging occurred on March 12, a vicious cycle occurred as the price was tanking and these levered traders unwound their positions selling btc spot To make matters worse...
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During this rapid unraveling, since most derivative contracts are collateralized by btc, the amount of btc being liquidated exceeded the liquidity at that price This caused order books to be decimated as there weren’t enough bids to sustain a stable market
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Last year Bloomberg warned of a credit bubble in the bitcoin lending market, but despite this near market implosion, lenders such as Genesis made it out unscathed without any default or capital losses bloomberg.com/news/articles/…
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This serves a testament to the risk management practices of lenders and the fact most loans are still heavily overcollateralized significantly reducing the credit risk involved
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