The Bitcoin price has been rallying in recent weeks, and one of the significant contributors are wrapped crypto tokens
Bitcoin is currently rallying and operating at a level last seen since 2018. The price of the leading cryptocurrency is currently trading around the $13,500 region after attempting the $14k mark a few days ago. `
According to Bloomberg, Bitcoin is getting support from advocates of its biggest rivals. Advocates of decentralised finance or DeFi applications are using Bitcoin as the collateral cryptocurrency on the Ethereum blockchain.
DeFi tokens have received much fanfare in the cryptocurrency space, enjoying massive gains in the third quarter of the year. Although the DeFi fever had subsided over the past few weeks, the DeFi tokens still contribute a considerable share to the cryptocurrency market.
DeFi allows people to lend and borrow money without intermediaries. Wrapped Bitcoin (WBTC) is used for DeFi purposes on numerous platforms, and it has played an enormous role in boosting Bitcoin’s price. Users place the coin on popular apps like Compound and earn massive returns in the process.
BitGo is one of the popular platforms to obtain WBTC. Investors deposit BTC with BitGo, which then keeps the funds in a central depository and uses them to invest in DeFi apps. WBTCs are becoming increasingly popular in the crypto space. Earlier this month, we reported that the total value locked in Wrapped Bitcoin hit the $1 billion mark, representing nearly 0.5% of Bitcoin’s total market cap.
Chen Fang, Chief Product Officer at BitGo, believes that the total amount of Wrapped Bitcoin could reach 10% of the minted coins over the next two years. Analysts and crypto experts now believe that WBTCs have contributed to Bitcoin’s price rally as people now have other things to do with the cryptocurrency instead of selling it.
Bill Noble, the chief technical analyst at crypto researcher Token Metrics, stated that DeFi had transformed Bitcoin into one of the world’s best collateral. Hence, users can leverage their coins instead of just selling them. Sam Bankman-Fried, chief executive officer of Alameda Research, states that, “WBTC has meant there’s more flow – through from the DeFi boom to BTC’s price”.
According to Bankman-Fried, Bitcoin will play a huge role in a DeFi – dominated future. Most crypto enthusiasts believe that decentralised finance will displace centralised financial intermediaries such as banks and other financial institutions.
The Bitcoin rally has been massive so far this year. BTC started the year trading at roughly $7,000 per coin. However, it has gone up by nearly 100% despite the Covid – 19 pandemic that has been affecting growth in the global economy and financial markets. It will be exciting to see how the leading cryptocurrency will fare by the end of the year.