2 min read
Despite the charges of money-laundering against derivatives giant BitMEX and Trump’s positive COVID test, Bitcoin’s price held steady over the past 24 hours. Meanwhile, decentralized finance coins are on the rise as the summer’s DeFi boom continues.
The current price of Bitcoin is $10,542, according to data from Coinmarketcap. It started the week at about $10,900 but fell by $400 on Thursday. Then it recovered slightly, before falling by a further $200 on Friday after the CFTC charged BitMEX with money-laundering and Trump caught COVID-19.
As the largest cryptocurrency by market cap—at least five times the size of the second-largest, Ethereum—Bitcoin’s price is a strong indicator for the health of the cryptocurrency market.
In the past day, Bitcoin’s daily price increase of 0.9% appears insignificant when compared to several of the top 10 cryptocurrencies by market cap. Ethereum increased by 2.6% in the past 24 hours, Binance Coin by 5.3%, Polkadot by 3.5% and Chainlink by 3.1%.
Zoom out to the past week, however, and Bitcoin comes out ahead. In the past seven days, Bitcoin fell by 1.4%. Meanwhile, Ethereum fell by 0.76%, XRP by 2.4%, Polkadot by 4.9% and Chainlink by 11%.
Far more volatile are coins that power leading decentralized finance, or DeFi protocols. The coin of decentralized exchange Balancer increased by 9% in the past 24 hours, interoperability protocol Ren by 16%, non-custodial loans protocol Aave by 8% and synthetics asset platform Synthetix by 8%.
Though the market caps of each are trivial compared to Bitcoin’s—never more than a billion dollars, compared to Bitcoin’s market cap of $195 billion—combined they represent a booming industry into which investors have poured in about $10 billion over the past four months.
The rise is likely linked to investors’ increased appetite for risk. DeFi protocols offer crazy-high interest rates, as well as lucrative incentives in the form of “governance tokens”—extra cryptocurrency earned from using the protocols.
Perhaps the rise is down to this year’s global economic contraction. When central banks like the U.S. Federal Reserve lower interest rates, low-risk assets no longer provide high returns. This makes cryptocurrency, a high-risk asset, more attractive for some investors.
This week, Bitcoin appears the safest bet.
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