Q1 activity on Okcoin indicates institutions are increasingly turning to stablecoin investments and decentralized financial services for bitcoin holdings
Okcoin, one of the world’s largest and fastest-growing cryptocurrency platforms, reported that stablecoins accounted for 34% of institutional trading volume on Okcoin in Q1 2022, a 25% increase from Q4 2021 and a 210% increase from Q1 2021. Institutions’ first quarter investing on Okcoin also demonstrated growing interest in diversifying their bitcoin activity, with purchases of Stacks (STX)—an asset that enables BTC lending/borrowing, prediction markets, and more—increasing by 43% from Q1 2021. The timing of both trends aligns with the past year’s rising inflation rates across the globe, underscoring the role of bitcoin and stablecoins as a hedge against the decline in fiat purchasing power.
“The institutional trading activity we’ve seen on Okcoin reflects macroeconomic anticipation of continued inflation spikes,” said Jason Lau, COO of Okcoin. “As a scarce asset, bitcoin has always been an attractive inflation hedge, but now we’re seeing large-scale holders take their positions a step further with entry into decentralized bitcoin lending and borrowing, yield farming, and more. While stablecoins don’t offer upside appreciation, they also open up access to DeFi yield opportunities and are an ideal mix of stability and liquidity, which is especially appealing to investors today.”
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Notably, institutional purchases of tether (USDT), the largest stablecoin by market capitalization, on Okcoin outsized that of bitcoin for the first time in January 2022, the same month US inflation hit a 40-year high of 7.5%. Other significant stablecoin activity among institutions includes a 470% increase in purchases of TerraUSD (UST) and 365% increase in purchases of USDK between January and March 2022.
In addition to the 43% jump in purchases of STX, institutions made significant investments in Arkadiko (DIKO), a Stacks-based network for bitcoin loan repayments, with a 480% increase in purchases of DIKO from Q4 2021 to Q1 2022. Purchases of NYCCoin (NYC), which is built on Stacks and can be staked by investors to earn yield in bitcoin, increased 134% by the end March after the asset was listed in January 2022.
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The proliferation of institutional involvement in bitcoin-based DeFi services was further underscored in Q1 by the oversubscribed launch of the Bitcoin Odyssey, a pledge among venture firms to deploy $165 million into startups building solutions for bitcoin adoption. Cofounded by Okcoin and the Stacks Accelerator, the collective includes Digital Currency Group, GBV Capital, White Star Capital, and GSR, among other institutions.
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