DeFi tokens outperform Bitcoin prices, what is the reason behind? Will the rally continue?
Since 2019, the Decentralized Finance (DeFi) has been rapidly growing in the cryptocurrency market. It has earned praise and positive reviews from the media.
The market is reflecting a promising trend of DeFi. The coins have been rising strongly and in a stable motion in 2020. Moreover, some tokens are showing gains above 60% in the past 5 days.
From a report given by a client of Delphi Digital, the tokens are giving a great gain over a short and long period. An example of a popular app using DeFi is Aave. Aave is a lending platform that has greatly exceeded Bitcoin over a 66.46% in the past week. Furthermore, MakerDAO, a DeFi-based token merchant, gains 25.60% in the previous week. Thus, the DeFi tokens outperform Bitcoin prices.
DeFi has included more prominent crypto-based assets within its sector, which includes:
Furthermore, the prices of the decentralized exchange (DEX) tokens have risen by double-digits. Although, the past growth of DeFi is based on a thinner trading volume compared to the daily trading volume of BTC. You can still ask, what makes the price rally of these assets pump strongly?
As Ethereum holds the majority of the activities on the blockchain, and it is facing scalability issues, it is greatly helping the growth of DeFi.
However, Ethereum 2.0 is the recent upcoming and important update. It has always been a plan of Ethereum to deal with issues in multi-faceted methods.
Users are expecting the release of Ethereum 2.0 in summer. As experts claim, it will have a great impact on the entire ecosystem of Ethereum. As Jon Jordan of DappRadar claims, “the Ethereum update will be user-friendly, it makes you feel you are using a mobile app or standard web that we are used to”.
Furthermore, while Ethereum 2.0 brings staking solutions, it aims to solve the current and future problems of the network. It will be fully implemented in 2021 or later.
High Network Activity
According to Delphi Digital, in the beginning of 2020, simple transactions or smart contracts have interacted with Ethereum. Moreover, the ETH gas station claims to have decentralized exchanges as the top contributor.
We all know that gas is highly used, but the number of transactions does not reflect the all-time high. DeFi is gaining traction within the network of Ethereum. Thus, it proves DeFi tokens outperform Bitcoin prices.
Bullish Signal for Users
In the past months, there is a newer increase in the interest in BTC. DeFi tokens became an interesting mode of investment. It has allowed higher yields through lending and increased its value on the lending apps. Thus, the DeFi sector has a significant performance over Bitcoin.
Furthermore, the number of new assets double in the last month giving an increase to the overall activity and grown projects.
The growing adoption of DeFi is a great sign, especially for Ethereum. But, there is still a long way for the network to be secured and to have a stable yield. Let’s look forward to the upcoming release of Ethereum 2.0 and the growing DeFi space.