Bitcoin price has gone up in the past few weeks, and one of the main culprits is wrapped crypto tokens
Bitcoin is currently recovering and operating at levels last seen since 2018. The price of the leading cryptocurrency is currently trading in the region of $ 13,500 after hitting the $ 14,000 mark a few days ago. `
Bitcoin is backed by proponents of its biggest rivals, according to Bloomberg. Proponents of decentralized finance or DeFi applications use Bitcoin as a collateral cryptocurrency on the Ethereum blockchain.
DeFi tokens have caused a lot of buzz in the cryptocurrency space, seeing massive gains in the third quarter of the year. Although the DeFi fever had subsided in recent weeks, the DeFi tokens still make a significant contribution to the cryptocurrency market.
DeFi allows people to borrow and borrow money with no middlemen. Wrapped Bitcoin (WBTC) is used for DeFi purposes on numerous platforms and has played a tremendous role in increasing the price of Bitcoin. Users put the coin on popular apps like Compound and earn massive returns in the process.
BitGo is one of the most popular platforms to get WBTC. Investors deposit BTC with BitGo, which then stores the funds in a central depository and thus invests 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 had hit the $ 1 billion mark, which is nearly 0.5% of Bitcoin’s total market cap.
Chen Fang, Chief Product Officer at BitGo, believes the total amount of bitcoin wrapped could reach 10% of the coins minted in the next two years. Analysts and crypto experts now believe that WBTCs contributed to Bitcoin’s price rally as people now have other things to do with the cryptocurrency instead of selling it.
Bill Noble, chief technical analyst at crypto researcher Token Metrics, said DeFi had turned Bitcoin into one of the best securities in the world. Hence, users can use their coins instead of just selling them. Sam Bankman-Fried, CEO of Alameda Research, explains, “WBTC meant more electricity was flowing – from the DeFi boom to the price of BTC.”
According to Bankman-Fried, Bitcoin will play a huge role in a DeFi-dominated future. Most crypto enthusiasts believe that decentralized finance will crowd out centralized financial intermediaries like banks and other financial institutions.
The Bitcoin rally has been massive so far this year. BTC started the year trading around $ 7,000 per coin. However, despite the Covid-19 pandemic that affected the growth of the global economy and financial markets, it has increased by almost 100%. It will be exciting to see how the leading cryptocurrency will develop by the end of the year.