Data Suggests DeFi is Recovering and Stable Coins Continue to Dominate the Industry
- Data Suggests That A 2017 Style Bullrun Of Bitcoin Has Started.
- A Solid Defi Recovery Is Underway.
- Stable Coins Continue To Gain Traction.
Thanks for joining us this weekend as we close out the week with another edition of Overbit Weekly Round Up. We’d like to start off today’s edition with a theme that’s been recurring for the last few weeks, and one that we’ve touched on often – the emergence of the next bull cycle for Bitcoin and cryptocurrency as a whole.
Looking at a small scale, we can see that BTCUSD rose nearly 7% from 5 October to 12 October, jumping from $10,804 to $11,555. Though these are not the tens and hundreds of percentage point gains we saw back in 2017, this recent surge is the best performing week for Bitcoin dating back to this July and has brought on a wave of optimism for investors, traders and even just spectators. According to data from TheTie – one of many data providers in the cryptocurrency space – the daily sentiment for Bitcoin has risen to bull-market levels. This rise in sentiment comes despite some pretty disheartening recent developments in the cryptocurrency world.
Countries all over the world, such as Russia have increased their regulatory scrutiny as of late on cryptocurrency holders. The UK’s body on financial affairs, known as the Financial Conduct Authority (FCA) banned retail cryptocurrency derivatives trading on 6 October. To top it off, BitMex, one of the world’s largest derivatives exchanges, was charged by the US Department of Justice with several counts of evading Anti-Money-Laundering statutes, among other infractions. None of these adverse events seemed to shake the cryptocurrency markets, though, a certainly encouraging sign given how volatile Bitcoin has been in the past to less-than-ideal news releases. Some positive developments seemed to help Bitcoin’s case as well, such as companies like MicroStrategy and Square converting hundreds of millions of dollars of their corporate balance sheets into Bitcoins.
In short, the positives keep piling up for Bitcoin and cryptocurrencies, while the negatives seem to roll off like water. If you asked us, we’d say the tide was swelling, and we’re already watching the next Bitcoin bull run unfold.
Our next story ties into the first – a massive recovery of the DeFi Market. In the first half of 2020, the newfound markets of DeFi and decentralized trading as a whole seemed to have taken the cryptocurrency world by storm. Many believe these innovations were a driving force in revitalizing the cryptocurrency markets, especially when considering how fragile the rest of the financial world was in 2020.
After August rolled by, though, the majority of DeFi tokens have lost their value. Many called for the ‘Death of DeFi’ during this brief downtrend, but as is often the case in cryptocurrency, these calls might’ve been premature. Uniswap, the world’s leading DeFi trading protocol, has continued to see increased trading volumes in the past few recent weeks. Not only that, but numbers indicate that UniSwap is actually outpacing centralized exchanges, with daily inflows of $300 million versus $156 million, respectively. It’s important to note here that there is indeed a fear of regulatory crackdowns on this newfound decentralized marketplace, with the US government indicating these exchanges are one of their primary concerns. Such a scenario could have a devastating impact on Bitcoin’s current bullish sentiment, but for now, traders are expecting a rebound in DeFi. And if this rebound does come to fruition, it’s likely to provide just the catalyst to push Bitcoin and the cryptocurrency market as a whole to a bull market and eventually all-time highs.
We’d like to close out this article by highlighting the impact (or lack thereof) that Stablecoins have had on the broader cryptocurrency market. Traditional most traders have grown accustomed to using BTC as their primary gateway to cryptocurrencies, and most alt-pairs (ETH, LTC, etc.), have trading pairs tied to Bitcoin. We are now starting to see exponential rises in the growth of stablecoins, from issuance being at $3.6 billion in June 2019 to the current $18.9 billion. This growth is also reflected in volumes where we say $36.6 billion January 2018 in the daily average peak might be currently near $100 billion level – a significant increase.
Digital Dollars, Stable-Coins, and the like will probably be a continued trend in the world of cryptocurrency for years to come, especially as Nation States start to issue their own digital currencies, i.e. China and the Digital Yuan, where we see the government is testing the digital currency with citizens right now. This is similar to what’s happening in the US Government where we see the Federal Reserve looking to release digital dollars via “airdrops” to its citizens for the next rounds of a stimulus package. Whether or not this happens, is yet to be seen, but at Overbit.com, we are keeping abreast of the latest news and trends in the global market to bring you the most insight available.
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