The week has started with minor reds, with several of the top ten coins decreasing by less than one percent, except XRP, which has dipped by 1.23%. The biggest winner for the top ten has been Chainlink, pumping by 28.77%.
Bitcoin has been trading rather sideways since May 27, hovering above the $9,000 region. Many investors have been quite disappointed, as they expected the coin to rise post-halving. But contrary to that notion, Bitcoin had never surged immediately after every halving if we look at an analysis of the coin’s historical data.
Bitcoin usually starts going parabolic around 8-12 months after every halving. Before that, it usually lingers on its volatility period before buying pressure starts to build up.
Most analysts actually neglected the fact that Bitcoin could have been in direr circumstances if it weren’t for the DeFi boom in the last three months.
And for the most part, it’s all thanks to these platforms’ liquidity mining or yield farming schemes. Liquidity mining is a process by which users can generate income from DeFi protocols in exchange for providing liquidity. In other words, users lend their assets to smart contracts.
Bitcoin (BTC) is the second largest asset locked under DeFI smart contracts, next to Ethereum (ETH). Around $141 BTC has been locked up in these DeFi protocols, but that’s not really the exact number.
Another hot token being heavily used for liquidity mining is Wrapped BTC (WBTC), a Bitcoin-turned-ERC-20 token worth exactly 1 BTC but is made compatible with the Ethereum network. WBTC has been widely used by yield farmers to earn COMP tokens from the Compound platform.
The combined value of BTC and WBTC locked-up capital amounts to $241 million, which decreases Bitcoin’s circulating supply and helps maintain its market value. But Bitcoin isn’t the only asset being given a leg up by DeFi.
The rise of DeFi over the past three months has corresponded and possibly facilitated the recent “alt season”.
Compound Continues to Dominate DeFi
The DeFi market has hit roughly $2.28 billion in locked-up assets as the trend continues to rise.
Meanwhile, Compound continues to lead the pack with 30.45% dominance as of press time. As for its governance token COMP, it has bottomed by $179.29 yesterday and continues to dump to $172.4 today. But high liquidity above the $180 region indicates a strong signal for growth and the possibility of a reversal.